UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
OR
[ ] 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 0-18083
Williams Controls, Inc.
------------------------
(Exact name of registrant as specified in its charter)
Delaware 84-1099587
- -------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14100 SW 72nd Avenue
Portland, Oregon 97224
- --------------------------------------- -------------------
(Address of principal executive office) (zip code)
Registrant's telephone number, including area code:
(503) 684-8600
Indicate by check mark 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 preceding 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
The number of shares outstanding of the registrant's common stock as of
January 31, 1998: 17,932,040
Williams Controls, Inc.
Index
Page
Number
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheet, December 31, 1997 (unaudited)
and September 30, 1997 3
Unaudited Consolidated Statement of Shareholders' Equity,
three months ended December 31, 1997 4
Unaudited Consolidated Statement of Operations,
three months ended December 31, 1997 and 1996 5
Unaudited Consolidated Statement of Cash Flows,
three months ended December 31, 1997 and 1996 6
Notes to Unaudited Consolidated Financial Statements 7-9
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 10-13
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signature Page 15
2
Williams Controls Inc.
Consolidated Balance Sheet
(Dollars in thousands, except share and per share information)
December 31, September 30,
1997 1997
(unaudited)
-------------- ---------------
ASSETS
Current Assets:
Cash and cash equivalents $ 961 $ 700
Trade and other accounts receivable, less
allowance of $127 and $185 at December 31
and September 30, respectively 8,682 8,468
Inventories 14,717 14,517
Prepaid expenses 1,181 713
Net assets held for disposition 307 638
Other current assets 1,098 1,098
-------------- ---------------
Total current assets 26,946 26,134
Investment in affiliate 201 559
Property plant & equipment, net 17,644 18,080
Receivables from affiliate 3,611 3,645
Net assets held for disposition 1,919 1,610
Other assets 1,321 1,348
--------------- --------------
Total assets $ 51,642 $ 51,376
============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 5,719 $ 5,070
Accrued expenses 2,599 3,008
Current portion of long-term debt
and capital leases 1,425 1,428
Estimated loss on disposal 109 500
-------------- --------------
Total current liabilities 9,852 10,006
Long-term debt and capital lease
obligations 22,427 22,857
Other liabilities 1,331 1,215
Commitments and contingencies - -
Minority interest in consolidated
subsidiaries 442 463
Shareholders' equity:
Preferred stock ($.01 par value, - -
50,000,000 authorized)
Common stock ($.01 par value,
50,000,000 authorized;18,062,240 and
17,912,240 issued at December 31, 1997
and September 30,1997, respectively) 180 179
Additional paid-in capital 9,882 9,822
Retained earnings 8,096 7,402
Unearned ESOP shares (191) (191)
Treasury stock (130,200 and 195,200
shares at December 31, 1997
and September 30, 1997, respectively) (377) (377)
-------------- --------------
Total shareholders' equity 17,590 16,835
============== ==============
Total liabilities and shareholders'equity $ 51,642 $ 51,376
============== ==============
The accompanying notes are an integral part of these statements.
3
Williams Controls, Inc.
Consolidated Statement of Shareholders' Equity
(Dollars in thousands)
(unaudited)
Issued
Common stock
------------------ Additional Retained Unearned Treasury Shareholders'
Shares Amount Paid in Earnings ESOP Shares Equity
Capital Shares
----------------------------------------------------------------------------------------
Balance, September 30, 1997 17,912,240 $ 179 $ 9,822 $7,402 $ (191) $ (377) $ 16,835
Net earnings - - - 694 - - 694
Common stock issued
pursuant to exercise
of warrant/options 150,000 1 60 - - - 61
---------------------------------------------------------------------------------------
Balance, December 31, 1997 18,062,240 $ 180 $ 9,882 $8,096 $ (191) $ (377) $ 17,590
=======================================================================================
The accompanying notes are an integral part of these statements.
4
Williams Controls, Inc.
Consolidated Statement of Operations
(Dollars in thousands, except share and per share information)
(unaudited)
Three months Three months
Ended Ended
December December
31, 1997 31, 1996
-------------- -------------
Sales $ 14,944 $ 13,521
Cost of sales 10,789 10,136
-------------- -------------
Gross margin 4,155 3,385
Operating expenses:
Research and development 559 471
Selling 691 676
Administration 1,078 909
-------------- -------------
Total operating expenses 2,328 2,056
-------------- -------------
Earnings from continuing operations 1,827 1,329
Other expenses:
Interest expense 376 517
Equity interest in loss of affiliate 358 130
-------------- -------------
Total other expenses 734 647
-------------- -------------
Earnings from continuing operations before
income tax expense 1,093 682
Income tax expense, net 421 272
-------------- -------------
Earnings from continuing operations before
minority interest 672 410
Minority interest in net (earnings) loss of
consolidated subsidiaries 22 (18)
-------------- -------------
Net earnings from continuing operations 694 392
Discontinued operations:
Loss from operations of automotive
accessories segment - (380)
-------------- -------------
Loss from discontinued operations - (380)
-------------- -------------
Net earnings $ 694 $ 12
============== =============
Basic and diluted earnings per common share
from continuing operations $ 0.04 $ 0.02
Basic and diluted loss per common share from
discontinued operations - $ (0.02)
-------------- -------------
Basic and diluted net earnings per common
share $ 0.04 $ 0.00
============== =============
The accompanying notes are an integral part of these statements.
5
Williams Controls, Inc.
Consolidated Statements of Cash Flows
(Dollars in thousands)
(unaudited)
Three months Three months
Ended Ended
December 31, December 31,
1997 1996
------------- --------------
Cash flows from operating activities:
Net income $ 694 $ 12
Adjustments to reconcile net income to net
cash from continuing operations:
Loss from discontinued operations - 380
Depreciation and amortization 360 343
Minority interest in earnings (loss) of
consolidated subsidiaries (22) 18
Equity interest in loss of affiliate 358 130
Changes in working capital of continuing
operations:
Receivables (180) 124
Inventories 128 246
Accounts payable and accrued expenses 240 (2,082)
Prepaid expenses and other (467) (530)
------------- --------------
Net cash provided by (used in) operating
activities of continuing operations 1,111 (1,359)
Cash flows from investing activities:
Payments for property, plant and equipment (239) (173)
------------- --------------
Net cash used for investing activities of
continuing operations (239) (173)
Cash flows from financing activities:
Repayments of long-term debt and capital
lease obligations (400) (40)
Proceeds from issuance of common stock 61
------------- --------------
Net cash provided by financing activities of
continuing operations (339) (40)
Net cash provided by (used in) discontinued
operations (272) 1,869
Net increase in cash and cash equivalents 261 297
Cash and cash equivalents at beginning of
period 700 1,379
------------- --------------
Cash and cash equivalents at end of period $ 961 $ 1,676
============= ==============
The accompanying notes are an integral part of these statements.
6
Williams Controls, Inc.
Notes to Unaudited Consolidated Financial Statements
Three Months ended December 31, 1997 and 1996 (Dollars in
thousands, except per share amounts)
Cautionary Statement: This report contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements include, without limitation, those statements relating to development
of new products, the financial condition of the Company, the ability to increase
distribution of the Company's products, integration of businesses the Company
acquires, disposition of any current business of the Company, including its
Kenco division. These forward-looking statements are subject to the business and
economic risks faced by the Company. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of the factors described above and other factors described elsewhere in
this report.
1. Organization
Williams Controls, Inc., including its wholly-owned subsidiaries, Williams
Controls Industries, Inc. ("Williams"); Aptek Williams, Inc. ("Aptek");
Premier Plastic Technologies, Inc. ("PPT"); Williams Automotive, Inc.;
GeoFocus, Inc. ("GeoFocus"); NESC Williams, Inc. ("NESC"); Williams
Technologies, Inc. ("Technologies"); Williams World Trade, Inc. ("WWT");
Kenco/Williams, Inc. ("Kenco"); Techwood Williams, Inc. ("TWI"); Agrotec
Williams, Inc. ("Agrotec") and its 80% owned subsidiaries Hardee Williams,
Inc. ("Hardee") and Waccamaw Wheel Williams, Inc. ("Waccamaw") is hereinafter
referred to as the "Company" or "Registrant."
2. Interim Consolidated Financial Statements
The interim consolidated financial statements have been prepared by the Company
and, in the opinion of management, reflect all material adjustments which are
necessary to a fair statement of results for the interim periods presented.
Certain information and footnote disclosure made in the last annual report on
Form 10-K have been condensed or omitted for the interim consolidated
statements. Certain costs are estimated for the full year and allocated to
interim periods based on activity associated with the interim period.
Accordingly, such costs are subject to year-end adjustment. It is the Company's
opinion that, when the interim consolidated statements are read in conjunction
with the September 30, 1997 annual report on Form 10-K, the disclosures are
adequate to make the information presented not misleading. The interim
consolidated financial statements include the accounts of the Company and its
subsidiaries. All significant inter-company accounts and transactions have been
eliminated.
3. Earnings (loss) per Share
As required, the Company adopted Statement of Financial Accounting Standards No.
128 during the quarter ended December 31, 1997. This statement requires dual
presentation of basic and diluted earnings per share (EPS) with a reconciliation
of the numerator and denominator of the EPS computations. Basic per share
amounts are based on the weighted average shares of common stock outstanding.
Diluted earnings per share assume the conversion, exercise or issuance of all
potential common stock instruments such as options, warrants and convertible
securities, unless the effect is to reduce a loss or increase earnings per
share. Accordingly, this presentation has been adopted for all periods
presented. The basic and diluted weighted average shares outstanding are as
follows:
Three Months Three Months
Ended Ended
December 31, December 31,
1997 1996
--------------- ---------------
Weighted average shares outstanding 17,832,040 17,674,787
Less unallocated ESOP shares 86,000 140,000
--------------- ---------------
Weighted average outstanding shares
used for basic EPS 17,746,040 17,534,787
Plus incremental shares from
assumed issuance of stock
options and other contingent
issuances 753,960 465,213
--------------- ---------------
Weighted average outstanding shares
used for diluted EPS 18,500,000 18,000,000
=============== ===============
7
Williams Controls, Inc.
Notes to Unaudited Consolidated Financial Statements
Three Months ended December 31, 1997 and 1996 (Dollars in
thousands, except per share amounts)
4. Year 2000 Conversion
The Company recognizes the need to ensure its operations will not be adversely
impacted by Year 2000 software failures. Software failures due to processing
errors potentially arising from calculations using the Year 2000 date are a
known risk. The Company is addressing this risk to the availability and
integrity of financial systems and the reliability of the operational systems.
The Company has established processes for evaluating and managing the risks and
cost associated with this problem, including communicating with suppliers,
dealers and others with which it does business to coordinate Year 2000
conversion. The total cost of compliance and its effect on the Company's future
results of operations is being determined as part of the detailed conversion
planning process.
5. Inventories
Inventories consisted of the following:
December 31, September 30,
1997 1997
------------ ------------
Raw material $ 9,130 $ 8,173
Work in process 1,679 2,035
Finished goods 3,908 4,309
------------ ------------
$ 14,717 $14,517
============ ============
Finished goods include component parts and finished product ready for shipment.
6. Sale Leaseback
In April 1997 the Company sold its Portland, Oregon manufacturing facility in a
sale-leaseback transaction for $4,524, less $250 withheld in an escrow fund for
possible environmental cleanup costs. The Company may be required to repurchase
the property within one year if it cannot cure possible environmental problems
at the sold property and may be required to finance part of the purchaser's
price in the second or third quarter of fiscal 1998 if the purchaser cannot
obtain permanent financing from a lender who would accept the environmental
condition of the property. The acquisition agreement between the Company and the
previous building owner contains provisions for indemnification of any
environmental cleanup costs after the Company spends $25 towards such cleanup.
The Company intends to seek indemnification from the prior property owner for
permanent monitoring or cleanup costs, if any.
The purchaser previously informed the Company that it had entered into a
purchase and sale agreement with a third party who would purchase the building
without any contingent repurchase obligation subject to third party due
diligence. In January, 1998, the purchaser informed the Company that the third
party declined to purchase the building.
8
Williams Controls, Inc.
Notes to Unaudited Consolidated Financial Statements
Three Months ended December 31, 1997 and 1996 (Dollars in
thousands, except per share amounts)
7. Segment Information
Three months Three months
Ended Ended
December 31, December 31,
1997 1996
-------------- -------------
Net sales by classes of similar products from
continuing operations
Vehicle components $ 11,697 $ 9,464
Agricultural equipment 2,247 3,104
Electrical components and GPS 1,000 953
------- --------
14,944 13,521
======= ========
Earnings (loss) from continuing operations
Vehicle components 2,394 1,337
Agricultural equipment (177) 212
Electrical components and GPS (390) (220)
------- --------
1,827 1,329
======= ========
Identifiable assets
Vehicle components 21,975 19,457
Agricultural equipment 10,541 13,114
Electrical components and GPS 8,388 7,583
------- --------
Total assets - continuing operations 40,904 40,154
Automotive accessories-discontinued operations 10,738 12,836
------- --------
Total assets 51,642 52,990
======= ========
Capital expenditures
Vehicle components 45 65
Agricultural equipment 109 76
Electrical components and GPS 85 32
-------- --------
Total capital expenditures-continuing operations 239 173
Automotive accessories-discontinued operations 38 50
-------- --------
Total capital expenditures 277 223
======== ========
Depreciation and amortization
Vehicle components 230 215
Agricultural equipment 50 67
Electrical components and GPS 80 61
-------- --------
Total depreciation and amortization-
continuing operations 360 343
Automotive accessories-discontinued operations 59 54
-------- --------
Total depreciation and amortization $ 419 $ 397
======== ========
9
Williams Controls, Inc.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Dollars in thousands, except per share amounts)
See "Cautionary Statement" contained at the beginning of this report.
Financial Condition, Liquidity and Capital Resources
The Company's principal sources of liquidity during the three months ended
December 31, 1997 were funds generated from continuing operations of $1,111
compared to cash used in operations of $1,359 for the same period in fiscal
1997. At December 31, 1997 the Company's working capital improved to $17,094
compared to $16,128 at September 30, 1997. The current ratio at December 31,
1997 also improved to 2.7 compared to 2.6 at September 30, 1997.
The Company used cash for discontinued operations of $272 during the first
quarter ended December 31, 1997 compared to cash provided by discontinued
operations of $1,869 for the first quarter in fiscal 1997. Cash flow from
discontinued operations decreased due to operating losses in the current year
quarter. The prior year quarter benefited from higher collections of accounts
receivable and inventory reductions.
The Company anticipates that cash generated from continuing operations and
borrowings will be sufficient to satisfy working capital for its continuing
operations; however, the Company will require additional financing to fund
certain research and development projects, an additional investment in Ajay, new
equipment purchases and moving of the PPT facility. The Company intends to raise
the additional capital through the sale of Kenco, which is expected to occur in
the second quarter of fiscal 1998, a possible sale/leaseback of its Aptek
manufacturing and research facility in Deerfield Beach, Florida and a private
placement or public offering of common or preferred stock. The Company is in
discussions with investment bankers regarding these transactions; however, there
is no assurance that the Company can raise new capital on terms acceptable to
the Company. The Company had $1,505 of loan availability under the revolving
loan as of December 31, 1997.
The proceeds of the sale of Kenco are expected to be approximately $1,600 and a
$1,500 retained equity investment in the acquiring company plus the assumption
of certain liabilities. In addition, the sale of Kenco inventory during the nine
months following the sale are expected to generate an additional $3,000 to
$4,000 of cash. The proceeds from the sale of Kenco, if completed, will be used
to repay bank debt of approximately $1,600. Any excess proceeds from inventory
sales will be used first to repay the $2,340 bridge loan provided to Ajay by a
previous lender.
In April 1997 the Company sold its Portland, Oregon manufacturing facility in a
sale-leaseback transaction for $4,524. The Company may be required to repurchase
the property in April 1998 if it cannot cure possible environmental problems at
the sold property or may be required to finance $3,200 of the purchaser's price
if the purchaser cannot obtain permanent financing from a lender who would
accept the environmental condition of the property. The acquisition agreement
between the Company and the previous building owner contains provisions for
indemnification of any environmental cleanup costs after the Company spends $25
towards such cleanup. The Company intends to seek indemnification from the prior
property owner for permanent monitoring or cleanup costs, if any.
The purchaser previously informed the Company that it entered into a purchase
and sale agreement with a third party who would purchase the building without
any contingent repurchase obligation subject to third party due diligence. In
January 1998 the purchaser informed the Company that the third party declined to
purchase the building.
10
Williams Controls, Inc.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Dollars in thousands, except per share amounts)
Financial Condition, Liquidity and Capital Resources (continued)
In fiscal 1997 the Company and Ajay agreed to a plan (the "Ajay
Recapitalization") whereby Ajay plans to obtain permanent bank financing
independent of the Company's loan which, management of Ajay has informed the
Company, when combined with a final investment by the Company, would result in
adequate working capital and eliminate any requirements for further advances or
guarantees from the Company. Ajay management informed the Company it has signed
a proposal letter with a lender for an asset based loan, which Ajay management
informed the Company that it believes that based on expected loan advance rates
would result in an approximately $2,000 shortfall of its projected working
capital needs. The Company intends to invest up to $2,000 to provide Ajay
adequate working capital, of which approximately $1,000 would be required no
later than the end of the second quarter of fiscal 1998.
If Ajay successfully completes its bank financing, the Company has also proposed
to exchange up to $4,000 of loans and advances into convertible voting preferred
stock which Ajay management has informed the Company that it believes would
allow Ajay to meet the minimum net worth criteria for continued listing on the
NASDAQ. The preferred stock would pay a dividend rate of 9% and would be
convertible into up to 12,000,000 shares of Ajay common stock. As presently
proposed, the dividend rate would increase two percentage points each in the
year 2002 and 2003 if Ajay does not achieve pre-tax earnings of at least $500 in
the two consecutive years prior to 2002 and 2003. The Company has also agreed to
purchase in fiscal 1998 approximately $1,000 of notes payable by Ajay to
affiliated parties which had provided loans to Ajay to help Ajay finance
operations during the financial restructuring; such notes payable have not yet
been purchased.
11
Williams Controls, Inc.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Dollars in thousands, except per share amounts)
Results of Operations
Three months ended December 31, 1997 compared to the three months ended December
31, 1996
Overview
Net sales from continuing operations increased 10.5% to $14,944 for the first
quarter ended December 31, 1997 from $13,521 in the same period in fiscal 1997.
Increased sales are attributed to higher unit sales volumes in the Company's
vehicle component segment, which were partially offset by declining unit sales
volumes in the agricultural equipment segment.
Net earnings from continuing operations increased 77.0% to $694 in the first
quarter of fiscal 1998 from $392 in the same fiscal 1997 quarter due to
increases in unit sales volumes in the Company's vehicle component segment,
which were partially offset by declining unit sales volumes in the agricultural
equipment segment and additional equity interest in losses of affiliate (Ajay
Sports, Inc.).
Net income increased to $694 in the first quarter of fiscal 1998 from $12 in the
comparable fiscal 1997 quarter due to higher profitability in the vehicle
component segment and elimination of losses in the Company's discontinued
operations which were offset by increased losses in the Company's agricultural
equipment segment and additional equity interest in losses of affiliate (Ajay
Sports, Inc.).
Net Sales
Net sales from continuing operations in the vehicle components segment increased
23.6% to $11,697 in the first quarter of fiscal 1998 compared to $ 9,464 in the
same quarter in fiscal 1997. Sales increases were due to higher ETC unit sales
volumes in the Class 7 and 8 truck OEM markets. Sales increases in the vehicle
component segment were partially offset by decreases in sales of 27.6% in the
Company's agricultural equipment segment. Sales declines in the agricultural
equipment segment are attributed primarily to excess dealer inventory.
Gross margin
Gross margin from continuing operations increased 22.7% to $4,155 in the first
quarter in fiscal 1998 compared to the prior year quarter. Gross margins as a
percentage of net sales from continuing operations were 27.8% in the first
quarter of fiscal 1998 and 25.0% in the same fiscal 1997 quarter. Increases in
dollar amount in the first quarter of fiscal 1998 resulted primarily from higher
unit sales volumes in the vehicle component segment offset by gross margin
decreases of 67.2% in the Company's agricultural equipment segment due to lower
sales volumes.
Operating expenses
Operating expenses for continuing operations increased 13.2% during the first
quarter ended December 31, 1997 compared to amounts in the same quarter in
fiscal 1997. Operating expenses as a percentage of net sales from continuing
operations decreased in the first quarter of fiscal 1998 to 15.6% from 15.2% in
the same fiscal 1997 quarter. Operating expenses increased 11.3% in the first
quarter of fiscal 1998 in the vehicle component segment to $1,305 and 61.6% in
the electronic components and GPS segment to $564. Increases in operating
expenses were attributed to higher sales volumes of the Company's ETC and GPS
products. Operating expenses decreased 14.0% in the agricultural equipment
segment to $459 compared to amounts in the first quarter of fiscal 1997.
Decreases in this segment are attributed to lower sales volumes.
12
Williams Controls, Inc.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Dollars in thousands, except per share amounts)
Results of Operations (continued)
Research and development expenses for continuing operations increased 18.7% to
$559 during the first quarter of fiscal 1998 compared to amounts in the same
quarter in fiscal 1997. As a percentage of net sales from continuing operations,
research and development expenses increased to 3.7% from 3.5%. In 1997 the
Company curtailed research and development activities in all business segments
during the Company's bank refinancing negotiations in fiscal 1997.
Selling expenses for continuing operations increased 2.2% to $691 in the first
quarter of fiscal 1998 compared to amounts in the same quarter in fiscal 1997.
Selling expenses as a percentage of net sales from continuing operations
decreased to 4.6% in the first quarter of fiscal 1998 compared to 5.0% in the
same 1997 quarter. Selling expenses decreased as a percentage of sales due to
increased sales volumes in the vehicle components segment.
General and administrative expenses for continuing operations increased 18.6% in
the first quarter of fiscal 1998 to $1,078 compared to amounts in the same
quarter in fiscal 1997. General and administrative expenses as a percentage of
net sales from continuing operations increased to 7.2% in the first quarter of
fiscal 1998 from 6.7% in the same quarter in fiscal 1997. Increases were
primarily due to additional personnel required for current and future growth
activities.
Earnings from continuing operations
Earnings from continuing operations increased $498, or 37.5%, to $1,827 in the
first quarter of fiscal 1998 from $1,329 in the same quarter of fiscal 1997 due
to a $1,057 increase in operating income in the automotive components segment
offset by a $389 decrease in the agricultural equipment segment and a $170
decrease in the electrical components and GPS business segments.
Other Expenses
Other expenses increased 13.4% to $734 in the first quarter of fiscal 1998 from
$647 in the same quarter of fiscal 1997. Increases were primarily attributed to
increased equity interest in losses of affiliate (AJAY Sports, Inc.).
Discontinued operations
Net losses from the discontinued automotive accessories segment were $391 net of
tax benefits of $201 for the first quarter ended December 31, 1997, compared to
$582 net of tax benefits of $302 in the same quarter of fiscal 1997. Estimated
future losses from discontinued operations were accrued in fiscal 1997;
therefore, there was no net loss effect in the first quarter of 1998.
Net sales from the discontinued segment declined $1,581, or 50%, in the first
quarter of fiscal 1998 to $1,582 compared to levels achieved in the fiscal 1997
quarter. The decline in automotive accessory sales was due to lower unit sales
and lower prices resulting from strong downward price pressure generated by
competitors who are more vertically integrated and have lower cost structures
than the Company's automotive accessories segment.
At December 31, 1997 the Company had estimated losses on disposal of $109
remaining as a current liability. The Company expects the sale of Kenco to occur
in the second quarter of fiscal 1998. The Company may be required to increase
its estimate of losses on disposal if the sale does not occur by that date.
13
Williams Controls, Inc.
Part II
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
14
Williams Controls, 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 thereunto duly authorized.
WILLIAMS CONTROLS, INC.
/s/Thomas W. Itin
------------------------------------
Thomas W. Itin, Chairman
President and Chief Executive Officer
/s/Gerard A. Herlihy
-------------------------------------
Gerard A. Herlihy, Chief Financial
Officer
Date: February 13, 1998