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| WSCI > SEC Filings for WSCI > Form 10-Q on 9-Jan-2009 | All Recent SEC Filings |
9-Jan-2009
Quarterly Report
Gross margin for the quarters ended November 30, 2008 and November 25, 2007
were 14% and 19%, respectively. The gross margin decrease for the quarter ended
November 30, 2008 is attributable to start-up costs associated with new programs
in the energy market. As described above, the Company experienced a softening in
demand during the fiscal 2009 first quarter. During the quarter, the Company was
commencing production on new parts from its primary customer in the energy
field, as well as starting production on a new program from an affiliate of this
primary customer. The production in these two areas incurred tooling and other
start-up related costs that negatively affected gross margin during the fiscal
2009 first quarter.
Selling and administrative expense of $583,000 for the quarter ending
November 30, 2008 was comparable to the prior year quarter's expense of
$577,000.
During the prior year quarter ended November 25, 2007, and as part of its
program to maintain its capital equipment at the highest technical level, the
Company sold some fully-depreciated equipment which generated a gain on sale of
equipment of $98,000.
Interest expense in the first quarter of fiscal 2009 was $92,000 compared to
$67,000 in first quarter of fiscal 2008 reflecting the investment in new
equipment that the Company has made as well as interest related to the Company's
building addition completed during the first quarter of fiscal 2009.
The Company recorded income tax expense at an effective tax rate of 36% for
the quarter ended November 30, 2008 and 35% for quarter ended November 25, 2007.
Liquidity and Capital Resources:
On November 30, 2008, working capital was $4,604,000 compared to $4,188,000
at August 31, 2008. The ratio of current assets to current liabilities at
November 30, 2008 was 2.15 to 1.0 compared to 1.97 to 1.0 at August 31, 2008.
The improvement in both measurements is attributable to the generation of cash
from operations in the Company's fiscal 2009 first quarter.
It is the Company's belief that its current cash balance, plus future
internally generated funds and its line of credit, will be sufficient to enable
the Company to meet its working capital requirements through the next 12 months.
The Company's line of credit expires February 1, 2009;however, it expects that
it will renew the line at that point. No amounts have been borrowed under the
line of credit which carries an interest rate at prime.
Cautionary Statement:
Statements included in this Management's Discussion and Analysis of Financial
Condition and Results of Operations, in future filings by the Company with the
Securities and Exchange Commission, in the Company's press releases and in oral
statements made with the approval of an authorized executive officer that are
not historical or current facts are "forward-looking statements." These
statements are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 and are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected. The Company
wishes to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made and are not
predictions of actual future results.
The following risks and uncertainties, as well as others not now anticipated,
in some cases have affected, and in the future could affect, the Company's
actual results and could cause the Company's actual financial performance to
differ materially from that expressed in any forward-looking statement: (i) the
Company's ability to obtain additional manufacturing programs and retain current
programs; (ii) the Company's ability to timely and cost effectively ramp up new
programs; (iii) the loss of significant business from any one
of its current customers could have a material adverse effect on the Company;
(iv) the Company was dependent upon two customers for 87% of its revenues in
fiscal year 2008 and expects that a significant portion of its future revenue
will be derived from these customers; (v) a significant downturn in the
industries in which the Company participates could have an adverse effect on the
demand for Company services; (vi) our sales are concentrated in a limited number
of highly competitive industries, each with a limited number of customers;
(vii) the prices of our products are subject to a downward pressure from
customers and market pressure from competitors; (viii) the Company's ability to
curtail its costs and expenses for new manufacturing programs, commensurate with
expected revenues; (ix) the Company's ability to comply with covenants of its
credit facility; (x) fluctuations in operating results due to, among other
things, changes in customer demand for our product in our manufacturing costs
and efficiencies of our operations; and (xi) a trend among our customers toward
outsourcing manufacturing to foreign operations.
The foregoing list should not be construed as exhaustive and the Company
disclaims any obligation subsequently to revise any forward-looking statements
to reflect events or circumstances after the date of such statements or to
reflect the occurrence of anticipated or unanticipated events.
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