Wellco Enterprises, Inc. (AMEX: WLC) today reported net income of $398,000, equivalent to basic and diluted earnings per share of $.34, from revenues of $6,291,000 for its fiscal quarter ended April 1, 2000, the third quarter of the 2000 fiscal year.

This compares with net loss of $376,000, equivalent to basic and diluted loss per share of $.32, from revenues of $4,383,000 in the prior year quarter ended April 3, 1999.

For the nine months period ended April 1, 2000, net income was $405,000, equivalent to basic and diluted earnings per share of $.35, from revenues of $15,582,000. This compares to net loss of $803,000, equivalent to basic and diluted loss per share of $.69, from revenues of $13,169,000 in the prior year nine month period ended April 3, 1999.

The major reason for increased revenues in both periods was an increase in the number of pairs of combat boots shipped under contract with the U. S. government. Total costs of sales and services and general and administrative expenses increased only 30% in the quarter and 8% in the nine month period, compared with revenue increases of 44% and 18% respectively. This was largely attributable to an overall reduction in costs from the consolidation of substantially all manufacturing operations in Puerto Rico, as well as the fact that overhead and general and administrative costs did not increase in proportion to the increase in revenues.

In February, 1999 the company initiated a restructuring and realignment plan under which the Company consolidated substantially all footwear manufacturing operations previously performed at its factory in Waynesville, North Carolina at its facility in Aguadilla, Puerto Rico. Included in operating results are non-recurring restructuring and realignment costs related to this plan as follows:

Quarter ended April 1, 2000 - $19,000 of realignment costs.
Nine months ended April 1, 2000 - $331,000 of net costs made up of an income item of $122,000 representing the adjustment of estimated employee pension costs to actual and $453,000 of other restructuring and realignment costs (employee severance, new employee training, equipment relocation and installation, legal and other costs).
Quarter ended and nine months ended April 3, 1999 - $589,000 of restructuring costs, primarily employee severance costs.
Included as an non-recurring income item in the nine months ended April 1, 2000 is $203,000 for the final settlement of a contract claim with the U.S. government. The three month period ended April 1, 2000 includes a non-recurring expense item of $12,000 representing the adjustment to actual of certain estimated expenses related to this claim which were recorded in the three month period ended January 1, 2000.

On May 16, 2000, the Board of Directors declared a cash dividend of $.15 (fifteen cents) per share to all shareholders of record on June 2, 2000, payable on June 16, 2000. The $.15 per share represents a 50% increase in the historical semi-annual dividend of $.10 per share.