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): November 16, 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 November 15, 2006, Wellco Enterprises, Inc. issued a press release announcing
the financial results for the first quarter ended September 30, 2006, cash
dividend and action taken at annual meetings. 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: November 15, 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.
/s/ Lee Ferguson____________________
Lee Ferguson
President - Chief Executive Officer
Dated: November 16, 2006
Exhibit 99(a)
WELLCO ENTERPRISES, INC. ANNOUNCES OPERATING RESULTS
FOR THE QUARTER ENDED SEPTEMBER 30, 2006, CASH DIVIDEND AND ACTION
TAKEN AT ANNUAL MEETINGS
Waynesville, North Carolina, November 15, 2006--Wellco Enterprises, Inc.
(AMEX-WLC) today reported a net loss for the first quarter of fiscal year 2007
(current quarter), which ended September 30, 2006 of $371,000 equivalent to
basic and diluted loss per share of $0.29 from revenues of $5,329,000. This
compares to net loss of $646,000 equivalent to basic and diluted loss per share
of $0.51, from revenues of $8,318,000 in the prior year three-month period ended
October 1, 2005 (prior quarter).
The Company's primary customer is the Defense Supply Center Philadelphia (DSCP),
the DOD agency with which the Company contracts for the manufacture of boots
used by U. S. Armed Forces personnel. Revenues decreased by $2,989,000. The
primary reason for the decrease was a 40% reduction of total pairs of boots
shipped to the U.S. government due to DSCP reducing inventories of certain
boots. However, late in the current period, DSCP started to increase their
orders and issued several delivery orders that will be shipped during the second
and third fiscal quarters of 2007.
Revenues from technical assistance fees and equipment rentals from licensees,
which vary with their shipments, decreased $116,000 because the Company's boot
manufacturing licensees were also affected by the DOD's reduction in inventories
of certain boots.
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 period, the Company received $159,000 of reimbursement under this
program, which is included in revenues. In the prior period, the Company did not
receive any reimbursement. 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 three months ended September 30, 2006 was $182,000 as
compared to negative gross profit of $84,000 for the prior period. During the
current period, the gross profit margin was only 3.4% of revenues due to an
extremely low level of production and sales volume. The Company sold
approximately 55,000 pairs of boots to DOD during the current period compared to
the prior period of 92,000 pairs of boots. Fixed costs (such as depreciation,
insurance and rent) and semi-variable costs did not decrease proportionately to
the decrease in the production and sales volume. In addition, the Company
retained critical operating personnel assuming the low level of production would
be temporary.
During the prior period, the gross profit was negative. In early August 2005,
the only U.S. supplier of a DOD required component had a significant quality
problem. Fortunately, the Company's quality system found this problem when it
first occurred. In order to assure that defective product did not get into
boots, the Company had to perform additional quality checks and time consuming
repairs. 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. The supplier agreed to reimburse certain excess
manufacturing costs and this reimbursement has been reflected in the Cost of
Sales and Services for the quarter ending October 1, 2005. However, some of the
excess costs could not be recouped from the supplier.
The Company announced the following, related to its November 14, 2006 Annual
Stockholders meeting:
Incumbent directors Claude S. Abernathy, Jr., Katherine J. Emerson, Lee
Ferguson, George Henson, Rolf Kaufman, David Kemper, John D. Lovelace, Sara
E. Lovelace, and Fred K. Webb, Jr. were elected for a one-year term expiring
in 2007.
At the subsequent 2006 Annual Meeting of the Board of Directors, the following
action was taken:
1. All present officers of the Company were reelected. In addition, Tammy
Francis was elected to the office of Vice President of Finance. Ms.
Francis's previous position was Controller.
2. The Board declared a quarterly cash dividend of $.10 (ten cents)
per share to all shareholders of record on December 8, 2006, payable
on January 5, 2007.
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
(UNAUDITED)
(000's omitted except for per share amounts and number of shares)
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Fiscal Three Months Ended
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September 30, 2006 October 1, 2005
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Revenues $5,329 $8,318
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Operating Loss (455) (631)
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Loss Before Income Taxes (469) (674)
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Benefit for Income Taxes (98) (28)
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Net Loss $(371) $(646)
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Loss Per Share:
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Basic $(0.29) $(0.51)
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Diluted $(0.29) $(0.51)
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Weighted Average Number of Common Shares Outstanding:
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For Basic Loss Per Share 1,270,746 1,270,746
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For Diluted Loss Per Share 1,270,746 1,270,746
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