UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 19, 2006
WELLCO ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 1-5555 56-0769274
(State or other jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
150 Westwood Circle, P.O. Box 1888, Waynesville, NC 28786
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (828) 456-3545
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions.
[ ] Written communication pursuant of Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
SECTION 2 Financial Information
ITEM 2.02 Results of Operations and Financial Condition
On May 16, 2006, Wellco Enterprises, Inc. issued a press release announcing the
financial results for the third quarter ended April 1, 2006 and cash dividend
declaration. A copy of Wellco Enterprises, Inc. press release is attached as
Exhibit 99(a) to this report and incorporated by reference.
The information furnished pursuant to this Item 2.02 and the exhibit hereto
shall not be deemed "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and shall not be deemed
to be incorporated by reference in any filing under the Securities Act of 1933,
as amended, or the Exchange Act except as shall be expressly set forth by
specific reference in such filing.
Exhibit Index
99(a) Press release, dated: May 16, 2006 issued by Wellco Enterprises, Inc.
SIGNATURE
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.
WELLCO ENTERPRISES, INC., Registrant
/s/ Lee Ferguson
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Lee Ferguson, CEO & President
Dated: May 19, 2006
Exhibit 99 (a)
WELLCO ENTERPRISES, INC. ANNOUNCES OPERATING RESULTS
FOR THE FISCAL QUARTER AND NINE MONTHS ENDED APRIL 1, 2006 AND CASH DIVIDEND
Waynesville, North Carolina, May 16, 2006--Wellco Enterprises, Inc. (AMEX-WLC)
today reported net income for the third fiscal quarter ended April 1, 2006
(current three month period) of $162,000, equivalent to basic and diluted
earnings per share of $0.13 from revenues of $13,395,000. This compares to net
income $209,000, equivalent to basic and diluted earnings per share of $0.16
from revenues of $14,646,000 in the prior year three month period ended April 2,
2005 (prior three month period).
Compared to the prior period, total revenues in the current period decreased by
$1,251,000. DOD contract pairs sold during the current period and prior period
were comparatively similar. However, during the current period the Company
shipped more pairs of a lower contract priced boot. Also, during the prior
quarter the Company shipped more commercial pairs of boots due to some large
sales to foreign customers.
Gross profit for the three months ended April 1, 2006 was $1,006,000 or 7.5% of
revenues as compared to gross profit of $915,000 or 6.2% for the prior period.
For the nine month period ended April 1, 2006 (current nine month period) the
Company had a net loss of ($259,000), equivalent to basic and diluted loss per
share of ($.20), from revenues of $32,754,000. This compares with net income of
$1,127,000, equivalent to basic earnings per share of $.89 ($.87 diluted), from
revenues of $40,406,000 in the prior year nine months ended April 2, 2005 (prior
nine month period).
In the current period, the Company shipped 377,000 pairs of boots under contract
with the U.S. Department of Defense as compared to 480,000 pairs in the prior
period, a decrease of 103,000 or 21%. In the prior period, delivery orders
issued by the DOD for Hot Weather boots incorporated a "surge" requirement to
meet the need in Iraq. The "surge" requirement was substantially completed in
the prior period.
The majority of the Company's boot manufacturing operations occur at the factory
of a wholly-owned subsidiary located in Puerto Rico. The Company is
participating in a Puerto Rican government program to assist manufacturers in
the training of new and expanded work force under which the Company is
reimbursed for part of the compensation paid to certain employees. During the
current nine month period, the Company received $405,000 of reimbursement under
this program, which is included in revenues. In the prior nine month period, the
Company received $1,165,000. The Company's policy is to recognize the
reimbursements as revenue in the period in which it is received, and not when
the related compensation is paid.
Gross profit for the nine months ended April 1, 2006 was $1,836,000 or 5.6% of
revenues as compared to gross profit of $3,618,000 or 9.0% for the prior nine
month period. This decrease in gross profit as a percentage of revenues is
primarily due to higher per unit manufacturing costs associated with lower
production levels and the decrease of $760,000 in reimbursement revenues from
the Puerto Rican government mentioned above. In addition, in early August 2005,
the only U.S. supplier of a DOD required component had a significant quality
problem. The rate of boot production was reduced due to the limited supply of
this component. After this supplier solved its quality problem, the rate of
production continued to be impaired, as it took that supplier several weeks to
reestablish full production.
For the current nine month period, the Company reflected income tax expense of
$88,000 on a pretax loss of $171,000. This is the result of the U.S. parent and
one subsidiary having consolidated income before taxes and the Puerto Rican
subsidiary having a pretax loss. The Puerto Rican subsidiary's losses are not
available to offset the taxable income for the U.S. jurisdiction companies who
file a consolidated federal income tax return. The composition of the pretax
income or loss between the parent and each of the subsidiaries impacts the
income tax expense or benefit for each interim period. The effective income tax
rate for the prior period was 21% of pretax income.
At a May 16, 2006 meeting, the Wellco Board of Directors declared a cash
dividend of $.15 per share payable on June 30, 2006 to shareholders of record on
June 2, 2006.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
Statements throughout this report that are not historical facts are
forward-looking statements. These statements are based on current expectations
and beliefs, and involve numerous risks and uncertainties. Many factors could
affect the Company's actual results, causing results to differ materially from
those expressed in any such forward-looking information.
These factors include, but are not limited to, the receipt of contracts from the
U. S. government and the performance thereunder; the ability to control costs
under fixed price contracts; the cancellation of contracts; and other risks
detailed from time to time in the Company's Securities and Exchange Commission
filings, including Form 10-K for the year ended July 2, 2005. Those statements
include, but may not be limited to, all statements regarding intent, beliefs,
expectations, projections, forecasts, and plans of the Company and its
management. Actual results may differ materially from management expectations.
The Company assumes no obligation to update any forward-looking statements.
Contact:
Wellco Enterprises, Inc.
Waynesville, North Carolina
Lee Ferguson, President and Chief Executive Officer
Phone: 828-456-3545, extension 167
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WELLCO ENTERPRISES, INC.
CONSOLIDATED OPERATING RESULTS
(UNAUDITED)
(000's omitted except for per share amounts and number of shares)
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Fiscal Nine Months Ended Fiscal Three Months Ended
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April 1, April 2, April 1, April 2,
2006 2005 2006 2005
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Revenues $32,754 $40,406 $13,395 $14,646
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Operating Income 36 1,637 366 327
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Net Interest Expense 207 203 98 66
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Income (Loss) Before
Income Taxes (171) 1,434 268 261
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Provision for Income
Taxes 88 307 106 52
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Net Income (Loss) $(259) $1,127 $162 $209
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Basic Earnings (Loss)
Per Share (0.20) 0.89 0.13 0.16
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Diluted Earnings (Loss)
Per Share (0.20) 0.87 0.13 0.16
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Weighted Average Number
of Common Shares
Outstanding:
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For Basic Earnings
Per Share 1,270,746 1,261,660 1,270,746 1,270,746
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For Diluted Earnings
Per Share 1,270,746 1,297,748 1,286,035 1,305,000
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