-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SHqF4HfJf7ngVPIK5sHPLltRcpU+XqOq0FSMf6L2Gra3k1uiugyrxjq3BCPrGzlO VTqk1XBELhQrHw5nnEV3sg== 0000950135-97-003343.txt : 19970813 0000950135-97-003343.hdr.sgml : 19970813 ACCESSION NUMBER: 0000950135-97-003343 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970629 FILED AS OF DATE: 19970812 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WPI GROUP INC CENTRAL INDEX KEY: 0000881771 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COILS, TRANSFORMERS & OTHER INDUCTORS [3677] IRS NUMBER: 020218767 STATE OF INCORPORATION: NH FISCAL YEAR END: 0928 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19717 FILM NUMBER: 97656103 BUSINESS ADDRESS: STREET 1: 1155 ELM ST CITY: MANCHESTER STATE: NH ZIP: 03101 BUSINESS PHONE: 6034563111 FORMER COMPANY: FORMER CONFORMED NAME: WALKER POWER INC DATE OF NAME CHANGE: 19930328 10-Q 1 WPI GROUP 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10 Q (Mark One) /XX/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 29, 1997 / / 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: 0-19717 WPI GROUP, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) NEW HAMPSHIRE 02-0218767 -------------------------------------------------------------- --------------------------------------- (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number) 1155 ELM STREET, MANCHESTER, NEW HAMPSHIRE 03101 -------------------------------------------------------------- --------------------------------------- (Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (603) 627-3500 -------------- - -------------------------------------------------------------------------------- (Former name, former address, and former fiscal year, if changed since last report) Check 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 past 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 --- --- Applicable only to issuers involved in bankruptcy proceedings during the preceding five years: Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 after the distribution of securities under a plan confirmed by the court. Yes No --- --- Applicable only to corporate issuers: State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: Class Outstanding as of July 25, 1997 ---------------------------- ------------------------------- Common Stock, par value $.01 5,984,162 shares 2 WPI GROUP, INC. INDEX ----- PAGE NO. -------- PART I - FINANCIAL INFORMATION Item 1. Consolidated Financial Statements Consolidated Balance Sheets 3 - June 29,1997 and September 29,1996 Consolidated Statements of Income 4 - Three months ended June 29,1997 and June 30,1996 - Nine months ended June 29,1997 and June 30,1996 Consolidated Statements of Cash Flows 5 - Nine months ended June 29,1997 and June 30,1996 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial 8 Condition and Results of Operations PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 9 SIGNATURES 10 - 2 - 3 WPI GROUP, INC. CONSOLIDATED BALANCE SHEETS
September 29, June 29, 1996 1997 ------------- ----------- (unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 206,829 $ 117,546 Accounts receivable - net of allowance for doubtful accounts of $244,300 and $340,000, respectively 10,881,315 14,001,402 Accounts receivable - other 1,618,873 1,206,862 Inventories 7,068,496 12,800,634 Prepaid expenses and other current assets 230,509 2,091,414 Prepaid income taxes 1,103,840 1,122,578 Refundable income taxes 547,750 284,064 ----------- ----------- Total current assets 21,657,612 31,624,500 PROPERTY, PLANT AND EQUIPMENT at cost, less accumulated depreciation 9,447,758 16,049,179 OTHER ASSETS 19,569,574 33,790,052 ----------- ----------- $50,674,944 $81,463,731 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 4,265,217 $ 5,436,990 Accrued expenses 3,464,164 6,036,334 Accrued income taxes 1,772,630 337,971 ----------- ----------- Total current liabilities 9,502,011 11,811,295 NOTES PAYABLE TO BANK 18,650,000 43,884,700 NON-COMPETE AGREEMENT 20,000 -- DEFERRED INCOME TAXES 1,954,287 2,243,376 COMMITMENTS STOCKHOLDERS' EQUITY: Common stock, $.01 par value; authorized 20,000,000 shares, issued 5,947,922 and 5,981,662, respectively. 59,479 59,817 Additional paid-in capital 13,658,604 13,833,852 Retained earnings 6,815,801 9,460,767 Cumulative foreign currency translation adjustments 14,762 169,924 ----------- ----------- Total stockholders' equity 20,548,646 23,524,360 ----------- ----------- $50,674,944 $81,463,731 =========== ===========
See notes to financial statements - 3 - 4 WPI GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME (unaudited)
Three Months Ended Nine Months Ended June 30, June 29, June 30, June 29, 1996 1997 1996 1997 ----------- ----------- ----------- ----------- NET SALES $12,655,422 $15,562,326 $33,003,591 $43,893,178 COST OF GOODS SOLD 7,892,902 9,394,476 20,086,060 26,442,415 ----------- ----------- ----------- ----------- GROSS PROFIT 4,762,520 6,167,850 12,917,531 17,450,763 ----------- ----------- ----------- ----------- OPERATING EXPENSES: Research and new product development 1,038,104 1,030,341 2,471,985 2,995,491 Selling, general and administration 2,727,647 3,547,753 7,576,963 9,915,704 ----------- ----------- ----------- ----------- Total operating expense 3,765,751 4,578,094 10,048,948 12,911,195 ----------- ----------- ----------- ----------- OPERATING INCOME 996,769 1,589,756 2,868,583 4,539,568 ----------- ----------- ----------- ----------- OTHER INCOME (EXPENSE) (77,693) (143,664) (257,997) (649,602) ----------- ----------- ----------- ----------- INCOME BEFORE PROVISION FOR INCOME TAXES 919,076 1,446,092 2,610,586 3,889,966 PROVISION FOR INCOME TAXES 268,000 439,000 835,000 1,245,000 ----------- ----------- ----------- ----------- NET INCOME $ 651,076 $ 1,007,092 $ 1,775,586 $ 2,644,966 =========== =========== =========== =========== NET INCOME PER WEIGHTED AVERAGE NUMBER OF COMMON SHARES $ 0.11 $ 0.16 $ 0.30 $ 0.43 =========== =========== =========== =========== Weighted Average Common Shares and Equivalents Outstanding 6,066,953 6,203,034 5,973,851 6,168,327 =========== =========== =========== ===========
See notes to financial statements - 4 - 5 WPI GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Nine Months Ended June 30, June 29, 1996 1997 ----------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,775,586 $ 2,644,966 ----------- ------------ Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,326,503 2,184,398 Changes in current assets and liabilities net of effects of acquisition: Accounts receivable (2,905,084) 1,084,300 Accounts receivable - other (3,230,032) 1,328,126 Inventories (495,814) (499,565) Prepaid expenses and other current assets 124,387 (702,606) Accounts payable 1,307,575 (1,588,068) Accrued expenses 234,910 (1,155,931) Accrued income taxes 306,409 (1,274,457) ----------- ------------ Total adjustments (3,331,146) (623,803) ----------- ------------ Net cash provided by (used in) operating activities (1,555,560) 2,021,163 ----------- ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Increase in notes payable 5,582,225 25,234,700 Decrease in long-term liabilities (3,180,000) (22,525) Proceeds from issuance of common stock 42,297 47,160 Proceeds from exercise of stock options 535,331 77,425 Tax benefit on exercise of non-statutory options -- 51,000 ----------- ------------ Net cash provided by financial activities 2,979,853 25,387,760 ----------- ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment (643,564) (3,624,410) Payments of accrued acquisition costs (313,502) (495,935) Acquisition, net of cash acquired -- (21,737,130) Increase in other assets (320,321) (1,795,893) ----------- ------------ Net cash (used in) investing activities (1,277,387) (27,653,368) ----------- ------------ EFFECT OF FOREIGN CURRENCY TRANSLATION ON CASH -- 155,162 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 146,906 (89,283) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 29,664 206,829 ----------- ------------ CASH AND CASH EQUIVALENTS, END OF PERIOD $ 176,570 $ 117,546 =========== ============ SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION: Income taxes paid 479,591 1,392,000 Interest paid 368,347 1,093,999
See notes to financial statements - 5 - 6 WPI GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:
Nine Months Ended June 30, June 29, 1996 1997 ---------- ----------- On November 10, 1995 the Company acquired the common stock of Micro Processor Systems, Inc. (MPSI) and subsidiary for $1 in cash plus the assumption of agreed upon liabilities: Fair value of assets acquired $7,398,285 $ -- Cash paid and expenses incurred of $510,001 (510,001) -- ---------- ----------- Liabilities assumed $6,888,284 $ -- ========== =========== On June 20, 1997 the Company acquired the capital stock of Husky Computers, Ltd. for $16,000,000 in cash plus the assumption of agreed upon liabilities: Fair value of assets acquired $ -- $28,654,990 Cash paid and expenses incurred of $23,539,700 -- 23,539,700 ---------- ----------- Liabilities assumed $ -- $ 5,115,290 ========== ===========
See notes to financial statements - 6 - 7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION The financial statements for the three months and nine months ended June 29,1997 and June 30, 1996 are unaudited and include all adjustments which, in the opinion of management, are necessary to present fairly the results of operations for the periods then ended. All such adjustments are of a normal recurring nature. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Form 10-KSB filed with the Securities and Exchange Commission (File No. 0-19717), which included financial statements for the years ended September 29,1996 and September 24,1995. The results of the Company's operations for any interim period are not necessarily indicative of the results of the Company's operations for any other interim period or for a full fiscal year. 2. INVENTORIES
Inventory consists of: September June 29, 1996 29, 1997 ----------- ----------- Raw Materials $4,360,602 $ 7,308,276 Work in Process 1,986,821 3,773,831 Finished Goods 721,073 1,718,527 ---------- ----------- Total $7,068,496 $12,800,634 ========== ===========
3. ACQUISITION On June 20, 1997, the Company acquired all the outstanding shares of Husky Computers Limited, located in Coventry, England for $21,539,700 in cash and the assumption of approximately $5,115,000 in debt. - 7 - 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis by management is provided to identify certain significant factors that affected the Company's financial position and operating results during the periods included in the accompanying financial statements. RESULTS OF OPERATIONS Net sales of $15.6 million for the third quarter of fiscal 1997 increased 23.0% from sales of $12.7 million for the third quarter of fiscal 1996. The increase was primarily due to improved sales in our targeted markets and the acquisition of Oyster Terminals, Ltd. For the first nine months of fiscal 1997, the company reported sales of $43.9 million, 33.0% higher than the sales of $33.0 million for the first nine months of fiscal 1996. Cost of sales of $9.4 million for the third quarter of fiscal 1997 resulted in a gross profit of 39.6%, compared to a gross profit of 37.6% for the same period of fiscal 1996. The increase was primarily due to product mix. Cost of sales of $26.4 million for the first nine months of fiscal 1997 resulted in a gross profit of 39.8%, compared to a gross profit of 39.1% for the same period of fiscal 1996. Total gross profit for the three and nine months increased due to the higher revenues discussed above. As a percentage of sales, selling, general and administrative expenditures were 22.8% and 21.6% for the quarters and 22.6% and 23.0% of the nine month periods ended June 29, 1997 and June 30, 1996, respectively. Actual expenditures increased due to the acquisition discussed above. Research and new product development expenses were 6.6% of sales for the quarter and 6.8% of sales for the nine months ended June 29,1997, compared to 8.2% and 7.5% of sales for the same three and nine month periods in fiscal 1996. Actual expenditures increased slightly due to the acquisition discussed above. Income before provision for income taxes of $3.9 million for the nine months ended June 29, 1997 increased 49.0% compared to $2.6 million for the nine months ended June 30, 1996. The increase is primarily due to increased sales. The effective income tax rate for fiscal 1997 is estimated at 32% year-to-date compared to 32% for fiscal 1996. LIQUIDITY AND CAPITAL RESOURCES The Company had working capital of $19.8 million at June 29,1997 compared to $12.2 million at September 29,1996. Cash flow provided from operations and financing activities was approximately $27.4 million for the nine months ended June 29, 1997. This inflow amount was offset by the cash flow used in investing activities of approximately $27.6 million for the nine months ended June 29, 1997. The Company's management believes it has sufficient working capital to meet its liquidity needs. As of June 29, 1997, the Company had no material commitments for capital expenditures. - 8 - 9 WPI GROUP, INC. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K A. Exhibits 27 Financial Data Schedule for nine months ended June 29, 1997. (This exhibit is filed electronically and is not included with printed copies of this form.) B. Reports on Form 8-K On June 25, 1997, the Company filed a Current Report on Form 8-K announcing the acquisition of Husky Computers Limited. - 9 - 10 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf by the undersigned thereunto duly authorized. WPI GROUP, INC. (Registrant) Date: August 8, 1997 By: /s/ Dennis M. Deegan ------------------------- Dennis M. Deegan President and Chief Operating Officer Date: August 8, 1997 By: /s/ John W. Powers ------------------------- John W. Powers Vice President and Chief Financial Officer -10 - EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF WPI GROUP, INC. FOR THE NINE MONTHS ENDED JUNE 29, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS SEP-28-1997 SEP-29-1996 JUN-29-1997 117,546 0 14,341,402 340,000 12,800,634 31,624,500 18,325,791 2,276,612 81,463,731 11,811,295 0 0 0 59,817 23,464,543 81,463,731 43,893,178 43,893,178 26,442,415 26,442,415 12,911,195 0 649,602 3,889,966 1,245,000 2,644,966 0 0 0 2,644,966 .43 .43
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