WLC Wellco Enterprises

Wellco Enterprises, Inc. (AMEX:WLC) today reported net income for the fourth quarter of fiscal year 2005 (current quarter), which, ended July 2, 2005 of $780,000 equivalent to basic earnings per share of $0.62 ($0.60 diluted), from revenues of $11,226,000. This compares to net income $858,000 equivalent to basic earnings per share of $0.70 ($0.66 diluted), from revenues of $14,174,000 in the prior year fiscal fourth quarter (prior quarter) that ended July 3, 2004. Compared to the prior quarter, total revenues in the current quarter decreased by $2,948,000. In the current quarter the Company shipped 29,000 pairs of the Army Combat Boot-Hot Weather (formerly known as the DMS boot) compared to 131,000 pairs in the prior quarter. In the current quarter the Company shipped 81,000 pairs of the Army Combat Boot-Temperate Weather (formerly known as the ICB boot) compared to 55,000 pairs in the prior quarter. Shipments of Hot Weather boots in the prior quarter were under the Defense Department's surge option, primarily to meet the urgent need in Iraq. The surge need was substantially met by the end of the first quarter of fiscal year 2005. In addition, for the second year of the related contract, which ends September 30, 2005, the Company was informed on August 29, 2005 that its allocation was reduced from 30% of total Hot Weather boot purchases to 15%. The overall gross profit margin between the two quarters was consistent at 16%. General and administrative expenses decreased $397,000 primarily due to a decrease in administrative compensation. 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 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 $220,000 in the current quarter. In the prior quarter, no reimbursements were received. The Company's policy is to recognize the reimbursement in the period that it is received. For the fiscal year ended July 2, 2005 (current fiscal year), net income was $1,907,000, equivalent to basic earnings per share of $1.51 ($1.47 diluted), from revenues of $50,467,000. This compares with net income of $2,448,000, equivalent to basic earnings per share of $2.04 ($1.97 diluted) from revenues of $45,693,000 for the prior fiscal year ended July 3, 2004 (prior fiscal year). Compared to the prior fiscal year, total revenues in the current fiscal year increased by $4,774,000. In the current fiscal year the Company shipped 324,00 pairs of the Temperate Weather boot compared to 75,000 pairs in the prior fiscal year. In the current fiscal year the Company shipped 256,000 pairs of the Hot Weather boot compared to 514,000 pairs in the prior fiscal year. The overall gross profit margin for fiscal year 2005 was 10% compared to 14% for the prior fiscal year. General and administrative expenses decreased $292,000. In the current fiscal year the Company received and recognized $1,385,000 from the Puerto Rico government program mentioned above. The amount received and recognized in the prior fiscal year was $321,000. 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. -0- *T WELLCO ENTERPRISES, INC. CONSOLIDATED OPERATING RESULTS (000's omitted except for per share amounts and number of shares) ---------------------------------------------------------------------- (unaudited) (audited) Fiscal Quarter Ended Fiscal Year Ended ---------------------------------------------------------------------- July 2, July 3, July 2, July 3, 2005 2004 2005 2004 ---------------------------------------------------------------------- Revenues $11,226 $14,174 $50,467 $45,693 ---------------------------------------------------------------------- Operating Income 1,016 1,252 2,653 3,326 ---------------------------------------------------------------------- Net Interest Expense 50 61 253 196 ---------------------------------------------------------------------- Income Before Income Taxes 966 1,191 2,400 3,130 ---------------------------------------------------------------------- Provision for Income Taxes 186 333 493 682 ---------------------------------------------------------------------- Net Income 780 858 1,907 2,448 ---------------------------------------------------------------------- Basic Earnings Per Share 0.62 0.70 1.51 2.04 ---------------------------------------------------------------------- Diluted Earnings Per Share $ 0.60 $ 0.66 $ 1.47 $ 1.97 ----------------------------------------- Weighted Average Number of Common Shares Outstanding: ---------------------------------------------------------------------- For Basic Earnings Per Share 1,270,746 1,233,392 1,263,938 1,200,937 ---------------------------------------------------------------------- For Diluted Earnings Per Share 1,297,403 1,290,446 1,298,300 1,243,954 ---------------------------------------------------------------------- *T