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): October 2, 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 September 28, 2006, Wellco Enterprises, Inc. issued a press release
announcing the financial results for the fourth quarter and fiscal year ended
July 1, 2006. 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: September 28, 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: October 2, 2006
Exhibit 99 (a)
WELLCO ENTERPRISES, INC. ANNOUNCES OPERATING RESULTS
FOR THE FOURTH QUARTER AND FISCAL YEAR ENDED JULY 1, 2006
Waynesville, North Carolina, September 28, 2006--Wellco Enterprises, Inc.
(AMEX-WLC) today reported net income for the fourth quarter of fiscal year 2006
(current quarter), which ended July 1, 2006 of $1,005,000 equivalent to basic
earnings per share of $0.79 ($0.79 diluted), from revenues of $11,268,000. This
compares to net income $780,000 equivalent to basic earnings per share of $0.62
($0.60 diluted), from revenues of $11,226,000 in the prior year fiscal fourth
quarter (prior quarter) that ended July 2, 2005.
Compared to the prior quarter, total revenues in the current quarter increased
by $42,000. The Company's primary customer is the Defense Supply Center
Philadelphia (DSCP), the Department of Defense (DOD) agency with which the
Company contracts for the manufacture of boots used by U. S. Armed Forces
personnel. In the current quarter, the Company shipped 16,000 pairs more of DOD
contract boots than the prior quarter. Partially offsetting the increase in DOD
shipments, the Company shipped 8,000 fewer pairs of commercial boots in the
current quarter than in the prior quarter.
In the current quarter, the gross profit margin was 16% and the prior quarter
gross profit margin was 14%. The gross profit margin increase is due to
increased manufacturing efficiencies during the current quarter. General and
administrative expenses increased $175,000 primarily due to an increase in
administrative compensation, directors fees and legal expenses related to the
hiring of a new Chief Executive Officer and one additional executive related to
a change in management structure.
The majority of the Company's boot manufacturing operations occurs 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 or expanded work force under which the Company is reimbursed
for part of the compensation paid to certain employees. Under this program, the
Company received and recognized as revenues $193,000 in the current quarter as
compared to $220,000 in the prior quarter. The Company's policy is to recognize
the reimbursement in the period that it is received.
In the current quarter, the Company had an $18,000 benefit from income taxes.
The majority of the current quarter's income was earned by the Company's Puerto
Rico subsidiary, which is exempt from Puerto Rico income tax and is partially
exempt from U. S. income taxes. Fiscal year 2006 is the last year in which this
subsidiary has an exemption from U. S. income taxes. In addition, for the
current quarter, the Company has reversed part of a previously recorded
valuation allowance on deferred tax assets that are now likely to be realized.
For the fiscal year ended July 1, 2006 (current fiscal year), net income was
$746,000, equivalent to basic earnings per share of $0.59 ($0.58 diluted), from
revenues of $44,022,000. This compares with net income of $1,907,000, equivalent
to basic earnings per share of $1.51 ($1.47 diluted) from revenues of
$50,467,000 for the prior fiscal year ended July 2, 2005 (prior fiscal year).
In the current fiscal year, revenues decreased by $6,445,000 when compared to
the prior fiscal year. The primary reason for the decrease was a 15% reduction
of total pairs of boots shipped to the U.S. government. During the prior year,
the Company was awarded and completed an exigency contract for 110,000 pairs of
the Temperate Weather Army Combat Boot (TW). Comparing fiscal years 2006 and
2005, pairs shipped of the TW boot decreased 55,000 pairs because fiscal year
2005 included the exigency contract. Also, pairs sold of the Hot Weather boot
(HW) deceased 88,000 pairs during fiscal year 2006 when compared to the prior
period due to DSCP reducing inventories of certain boots. However, in fiscal
year 2006,DSCP increased their purchases of the Extreme Cold Weather boot by
56,000 pairs.
As mentioned above, the Company's Puerto Rico subsidiary participates in a
Puerto Rico government program under which certain portions of wages paid to new
employees in training are reimbursed to that subsidiary. In the current fiscal
year, the Company received from the Government of Puerto Rico $598,000 under
this program. This is $787,000 less than the $1,385,000 received during the
prior fiscal year.
Gross profit for the current fiscal year was 8.2% of revenues as compared to
gross profit of 10.4% for the prior period. This decrease in gross profit as a
percentage of revenues is primarily due to a higher per unit manufacturing costs
associated with lower production levels during the first three quarters of
fiscal year 2006 and the decrease of $787,000 in reimbursement of wages from the
Puerto Rican government mentioned above.
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 1, 2006. 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
(000's omitted except for per share amounts and number of shares)
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(unaudited) (audited)
Fiscal Quarter Ended Fiscal Year Ended
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July 1, July 2, July 1, July 2,
2006 2005 2006 2005
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Revenues $11,268 $11,226 $44,022 $50,467
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Operating Income 1,044 1,016 1,080 2,653
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Net Interest Expense 57 50 264 253
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Income Before Income Taxes 987 966 816 2,400
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(Benefit) Provision for
Income Taxes (18) 186 70 493
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Net Income 1,005 780 746 1,907
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Basic Earnings Per Share 0.79 0.62 0.59 1.51
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Diluted Earnings Per Share $0.79 $0.60 $0.58 $1.47
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Weighted Average Number of Common
Shares Outstanding:
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For Basic Earnings Per Share 1,270,746 1,270,746 1,270,746 1,263,938
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For Diluted Earnings Per Share 1,278,537 1,297,403 1,277,604 1,298,300
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