-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, a7J7zK04+T4AgWtCdmsOD+bzzy047cyGTw+N+pe2aO9qL3TTTd7GZlvmY6WRIKAp EdPXy6OsA4k4W2n3ypNScA== 0000950009-94-000052.txt : 19940330 0000950009-94-000052.hdr.sgml : 19940330 ACCESSION NUMBER: 0000950009-94-000052 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DOUGLAS & LOMASON CO CENTRAL INDEX KEY: 0000029854 STANDARD INDUSTRIAL CLASSIFICATION: 2531 IRS NUMBER: 380495110 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 000-00627 FILM NUMBER: 94518521 BUSINESS ADDRESS: STREET 1: 24600 HALLWOOD CT CITY: FARMINGTON HILLS STATE: MI ZIP: 48335 BUSINESS PHONE: 3134787800 10-K 1 # SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ________________ FORM 10-K (Mark One) _X_ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 1993, 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 0-627 ________________ DOUGLAS & LOMASON COMPANY (Exact Name of Registrant as Specified in its Charter) MICHIGAN 38-0495110 (State or other Jurisdiction of (IRS Employer Identification No.) Incorporation or Organization) 24600 Hallwood Court, Farmington Hills, Michigan 48335-1671 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (810) 478-7800 Securities Registered Pursuant to Section 12(b) of the Act: Name of Each Exchange Title of Each Class on Which Registered ------------------- --------------------- None None Securities Registered Pursuant to Section 12(g) of the Act: Common Stock, $2.00 par value (Title of Class) 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 _____ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. __X__ As of March 10, 1994, 4,227,970 shares of Common Stock of the Registrant were outstanding, and the aggregate market value of the shares of Common Stock as of such date (based on the closing price in The Nasdaq National Market) of the Registrant held by nonaffiliates (including certain officers and non-officer directors) was approximately $62,903,069. Documents Incorporated by Reference The following documents are incorporated by reference into this Form 10-K: Part I: Item 1 - Part of Annual Report of the Registrant for the year ended December 31, 1993 Part II: Items 5-8 - Part of Annual Report of the Registrant for the year ended December 31, 1993 Part III: Items 10-12 - Part of definitive Proxy Statement of the Registrant dated March 31, 1994 filed pursuant to Regulation 14A. PART I Item 1. Business Douglas & Lomason Company (the "Company" or the "Registrant") is a major supplier of original equipment parts to the North American automotive industry. Automotive products, which have accounted for approximately 93% of the Company's total sales during each of the last three years, include fully trimmed seating, seating components and mechanisms, and decorative and functional body trim parts. These products are manufactured primarily for the three major U.S. automotive manufacturers and other original equipment suppliers. The Company also manufactures material handling systems and custom truck bodies and trailers. These products have accounted for approximately 7% of the Company's total sales during each of the last three years. The Registrant classifies its business into two segments: automotive products and industrial and commercial products. Exclusive of automotive products, no segment accounts for 10 percent or more of consolidated revenues or profits. A summary of certain segment information appears in note (6) of notes to consolidated financial statements on page 24 of the 1993 Annual Report to Shareholders and is incorporated herein by reference. AUTOMOTIVE PRODUCTS Seating Seating systems and components account for the principal portion of the Company's automotive business. The Company is one of the three major independent manufacturers and assemblers of seating systems and components for the North American automotive industry. Seat assemblies produced by the Company satisfy the seat requirements of a full range of vehicles. The Company currently supplies complete seats to customer assembly plants on a "just-in-time" (JIT) "sequenced parts delivery" (SPD) basis for passenger cars, light and medium duty trucks, and vans. The Company's seat frame business has grown significantly over the 47 years it has been supplying seating systems and components to the North American automotive industry. The Company believes it is currently one of the largest independent manufacturers of seat frames in North America. The seat frames manufactured by the Company are incorporated by it into complete seats and sold to vehicle assembly plants and are also sold separately to other seat assemblers. The Company believes that it is recognized as one of the most vertically integrated independent seat manufacturers in North America. The Company is capable of producing seat frames, manual seat mechanisms, foam, covers, suspension systems, and plastic seat trim at its manufacturing facilities. The Company believes that opportunities for growth may emerge in foreign transplant operations in North America and from the expanding trend toward seat assembly outsourcing in Europe. The Company has established technical and business relationships with two Japanese partners to facilitate the exchange of technical information and to establish business relationships with foreign automakers. In 1988, the Company formed a page 1 50/50 joint venture company with Namba Press Works Co., Ltd. of Japan. This company, named Bloomington-Normal Seating Company, is located in Normal, Illinois and manufactures seating systems for Diamond-Star Motors, a subsidiary of Mitsubishi Motors Corporation. The Company also has a license agreement with Imasen Electric of Japan for the manufacture of manual seat adjuster mechanisms. Body Trim Components The Company has been supplying decorative body trim components to the automotive industry since 1902. These products include body side, wheel opening and structural B-pillar moldings, head and tail lamp bezels, bumpers, including those back filled with Azdel, and window and door sealing systems. The Company has the capability of processing large quantities of metal, plastic and composite material parts through injection molding, pressing, rolling, laminating and extruding systems and finishing parts through anodizing and painting. The Company produces a variety of injection molded and extruded plastic moldings including bi-laminate body side and deck lid moldings. These moldings can be finished in a variety of ways such as with a high gloss, in body colors including metallics, or with encapsulated colorful graphics. Product Engineering The Company pursues new products and processes through a 120 person product engineering staff. This staff is customer-focused in that all new projects must be based on a customer's requirements. This facilitates the development of products in shorter lead time and matches products more closely to consumer requirements. Sales and Customers Sales coverage by the Company of the North American automotive industry is maintained by an experienced direct sales staff consisting of 18 account managers, divided into separate and distinct customer-focused groups. The sales group is supported by fully developed program management teams incorporating simultaneous engineering techniques. The percent of sales to total automotive sales of seating systems and body trim components to the three major automotive manufacturers during the past three years is as follows:
1991 1992 1993 Chrysler Corporation........................ 43% 50% 51% Ford Motor Company.......................... 28 25 25 General Motors Corporation.................. 20 18 15
Sales percentages include sales to other seat assemblers for ultimate sale to the above customers. INDUSTRIAL AND COMMERCIAL PRODUCTS This segment of the Company's business accounted for approximately 7% of total Company sales in each of the three years ended December 31, 1993. page 2 Industrial and commercial products include: Material Handling Equipment. The Company designs and manufactures material handling equipment such as conveyors, bagging and packaging machines, pulleys and rollers. The Company also produces related equipment such as elevators, bag flatteners, automatic palletizers and bag placers. These products are sold to the agriculture, mining and transportation industries. Custom Truck Bodies and Trailers. The Company serves the food and beverage industry through the design and manufacture of delivery truck bodies and trailers for soft drinks, beer, bottled water, bakery products, milk and ice cream, meats, frozen foods and other products. These units include side-loading aluminum bodies and trailers, and steel, aluminum or reinforced fiberglass refrigerated truck bodies and trailers. Competition The Company is one of the three major independent seat suppliers to the North American automotive industry. The Company's primary independent competitors are Johnson Controls Inc.'s Automotive Products Group and Lear Seating Inc. The Company also competes with captive seating suppliers, namely: Inland Fisher-Guide Division of General Motors Corporation and the Plastic Trim Products Division of Ford Motor Company. The Company's body trim business competes with a significant number of major competitors. There are 10 to 12 with a full range of material, process and product capabilities similar to the Company's and several competitors with specialized niche products. GENERAL Raw materials purchased by the Registrant consisting of carbon steel, aluminum, stainless steel, plastics, and fabric are generally available from numerous independent sources. Management believes that the trend in its material costs is upward. While the Registrant owns several patents and patent rights, patent protection is not materially significant to its business. To the best of the Registrant's knowledge, its permits are in compliance with all federal, state and local environmental protection provisions. The number of persons employed by the Registrant at December 31, 1993 was 5,697. The Registrant does not consider its business seasonal except to the extent that automotive changeovers to new models affect business conditions. Item 2. Properties The corporate offices of the Company and the product engineering staff are located in Farmington Hills, Michigan in two buildings containing approximately 81,000 square feet. Information as to the Company's 20 principal facilities in operation as of December 31, 1993 is set forth below: page 3
Approximate Year Owned or Location Square Feet Acquired Leased AUTOMOTIVE Seating Columbus, Nebraska............................ 273,400 1965 Owned Milan, Tennessee.............................. 202,300 1976 Owned Red Oak, Iowa................................. 193,500 1967 Owned Marianna, Arkansas............................ 188,200 1960 Owned Havre de Grace, Maryland.(1).................. 163,500 1986 Owned Ciudad Acuna, Mexico.......................... 134,100 1987 Owned Excelsior Springs, Missouri.(2)............... 87,500 1993 Leased Troy, Missouri.(1)............................ 30,000 1990 Leased Orangeville, Ontario, Canada.(3).............. 28,300 1992 Leased Del Rio, Texas.(3)............................ 25,000 1987 Leased Saltillo, Mexico 44,000 1993 Owned Body Trim Components Cleveland, Mississippi..(1)................... 300,000 1964 Owned Carrollton, Georgia........................... 240,700 1955 Owned 48,900 1979 Owned LaGrange, Georgia............................. 85,900 1988 Leased Phenix City, Alabama..(1)..................... 82,000 1970 Owned INDUSTRIAL AND COMMERCIAL Material Handling Equipment Humboldt, Iowa................................ 96,300 1968 Owned Dakota City, Iowa............................. 50,500 1978 Owned Fairfield, CA.(3)............................. 4,900 1993 Leased Custom Truck Bodies and Trailers Columbus, Georgia............................ 133,000 1962 Owned Amory, Mississippi............................ 67,000 1982 Owned Kansas City, Missouri......................... 10,400 1983 Leased - ---------------- (1) The Company has announced that it will close this facility during 1994. (2) This facility will commence operations in 1994. (3) A distribution facility.
The Company believes that substantially all of its property and equipment is in good condition and adequate for its present requirements. Item 3. Legal Proceedings There are no material legal proceedings pending against the Registrant or its subsidiaries. Item 4. Submission of Matters to a Vote of Security Holders Not applicable page 4 Executive Officers of the Registrant The names and ages of all executive officers of the Registrant are as follows:
Has Served in Position Name Position Since Age Harry A. Lomason II Chairman of the Board 1992 President 1976 Chief Executive Officer 1982 59 James B. Nicholson Vice Chairman of the Board 1990 50 James J. Hoey Senior Vice President 1992 Chief Financial Officer 1985 57 Robert T. Hill Senior Vice President- Sales, Marketing, Engineering and Strategic Planning 1992 52 Ollie V. Cheatham Vice President-Human Resources 1984 49 A. Warren Vice President-Safety, Daubenspeck III Environmental and Loss Control 1988 42 Scott E. Paradise Vice President-Automotive Sales 1993 39 Joe Kamil Vice President-Research & Development and Engineering Services 1991 40 Robert D. Stachura Vice President and Executive Manager- Manufacturing 1990 51 H. James Kouris Vice President-Purchasing 1976 63 Roger H. Morelli Vice President-Materials & Quality Assurance and Executive Manager-Decorative Plants 1987 49 Dan D. Smith Vice President- Manufacturing Analysis 1989 45 Gary A. Pniewski Vice President and Product Team Manager-Seating 1994 49 Verne C. Hampton II Secretary 1977 59 Melynn M. Zylka Treasurer 1990 33
page 5 Officers of the Registrant are elected each year at the Annual Meeting of the Board of Directors to serve for the ensuing year or until their successors are elected and qualified. All of the executive officers of the Registrant named above have held various executive positions with the Registrant for more than five years except: Mr. Nicholson who has been President and Chief Executive Officer of PVS Chemicals, Inc. and a Director of the Company for more than five years; Mr. Hampton who has been a partner with the law firm of Dickinson, Wright, Moon, Van Dusen and Freeman for more than five years; Mr. Hill who joined the Company in October 1992 after serving in various positions with General Motors Corporation for more than five years, the most recent of which was Director for the Quality Network of the Delco Chassis Division; and Mr. Pniewski who joined the Company in January 1994 after serving in various positions with Ford Motor Company for more than twenty years, the most recent of which was Vehicle Seat Systems Engineering Manager in the Plastics and Trim Products Division. There is no family relationship between any of the foregoing persons. PART II Item 5. Market for the Registrant's Common Equity and Related Shareholder Matters The information set forth under the caption "Shareholder Information" on page 29 the 1993 Annual Report of the Registrant is incorporated by reference herein. As of December 31, 1993 there were 806 holders of record of the Registrant's Common Stock. Item 6. Selected Financial Data The information set forth under the caption "Selected Financial and Other Data" on page 17 the 1993 Annual Report of the Registrant is incorporated by reference herein. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The information set forth under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 16 and 17 of the 1993 Annual Report of the Registrant is incorporated by reference herein. Item 8. Financial Statements and Supplementary Data The information set forth on pages 18 through 27 of the 1993 Annual Report of the Registrant is incorporated by reference herein. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not Applicable page 6 PART III Item 10. Directors and Executive Officers of the Registrant The information set forth under the caption "Information About Directors and Nominees for Directors" on pages 3 and 4 of the definitive Proxy Statement of the Registrant dated March 31, 1994 filed with the Securities and Exchange Commission pursuant to Regulation 14A is incorporated by reference herein for information as to directors of the Registrant. Reference is made to Part I of this Report for information as to executive officers of the Registrant. Item 11. Executive Compensation The information set forth under the caption "Executive Compensation" on pages 6, 7 and 8 of the definitive Proxy Statement of the Registrant dated March 31, 1994 filed with the Securities and Exchange Commission pursuant to Regulation 14A is incorporated by reference herein. Item 12. Security Ownership of Certain Beneficial Owners and Management The information set forth under the caption "Security Ownership" on pages 1 and 2 of the definitive Proxy Statement of the Registrant dated March 31, 1994 filed with the Securities and Exchange Commission pursuant to Regulation 14A is incorporated by reference herein. Item 13. Certain Relationships and Related Transactions The information set forth in footnotes (2) and (3) under the caption "Executive Compensation" and in the last paragraph under the caption "Retirement Plan" on pages 6 and 7 of the definitive Proxy Statement of the Registrant dated March 31, 1994 filed with the Securities and Exchange Commission pursuant to Regulation 14A is incorporated by reference herein. page 7 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) The following documents are filed as a part of this report: 1. Financial Statements The following consolidated financial statements of Douglas & Lomason Company and subsidiaries included in the Douglas & Lomason Company 1993 Annual Report to its Shareholders for the year ended December 31, 1993 are incorporated herein by reference: Consolidated Balance Sheets at December 31, 1993 and 1992. Consolidated Statements of Earnings for each of the years in the three year period ended December 31, 1993. Consolidated Statements of Shareholders' Equity for each of the years in the three year period ended December 31, 1993. Consolidated Statements of Cash Flows for each of the years in the three year period ended December 31, 1993. Notes to Consolidated Financial Statements. The consolidated financial information for the years ended December 31, 1993, 1992, and 1991 set forth under "Index to Consolidated Financial Statements and Schedules." EXHIBITS (The Exhibit marked with one asterisk below was filed as an Exhibit to the Form 10-K Report of the Registrant for the fiscal year ended December 31, 1983; the Exhibit marked with two asterisks below was filed as an Exhibit to the Form 10-Q Report of the Registrant for the quarter ended June 30, 1988; the Exhibit marked with three asterisks below was filed as an Exhibit to the Form 10-K Report of the Registrant for the fiscal year ended December 31, 1989; the Exhibits marked with four asterisks below were filed as Exhibits to the Form 10-K Report of the Registrant for the fiscal year ended December 31, 1991; and the Exhibit marked with five asterisks below was filed as an Exhibit to the Form 10-K Report of the Registrant for the fiscal year ended December 31, 1992, and are incorporated herein by reference, the Exhibit numbers in brackets being those in such Form 10-K or 10-Q Reports). page 8 (3)(a) Restated Articles of Incorporation of Registrant. (3)(b) By-Laws of the Registrant. (4)(a)** Term Loan Agreement dated as of May 20, 1988 between Registrant and the Banks named in Section 2.1 thereof [1]. (4)(a)(1)**** Amendments to Term Loan Agreement dated as of May 20, 1988. [(4)(a)(1)] (4)(b)**** Term Loan Agreement dated as of December 19, 1991 between Registrant and NBD Bank, N.A. and Manufacturers Bank, N.A., as amended. [(4)(b)] (10)(a)* 1982 Incentive Stock Option Plan of the Registrant [10](1) (10)(b)*** 1990 Stock Option Plan of the Registrant [(10)(b)](1) (10)(c)**** Joint Venture Agreement dated as of July 25, 1986 between Registrant and Namba Press Works Co., Ltd. [(10)(c)] (13) Portions of 1993 Annual Report of Registrant. (22)***** Subsidiaries of the Registrant. [(22)] (24) Consent of KPMG Peat Marwick. (b) Reports on Form 8-K. The Registrant has not filed any reports on Form 8-K during the last quarter of the period covered by this report. (1) This document is a management contract or compensatory plan. page 9 SIGNATURES Pursuant to the requirements of the Section 13 or 15 (d) 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 on the 29th day of March, 1994. DOUGLAS & LOMASON COMPANY By: /s/H. A. Lomason II ------------------------------- H. A. Lomason II Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer) By: /s/James J. Hoey ------------------------------- James J. Hoey Senior Vice President and Chief Financial Officer (Principal Financial Officer) By: /s/Melynn M. Zylka ------------------------------- Melynn M. Zylka Treasurer (Principal Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on March 29, 1994. Signature Title --------- ----- /s/James E. George Director ---------------------- James E. George /s/H. A. Lomason II Director ---------------------- H. A. Lomason II /s/Dale A. Johnson Director ---------------------- Dale A. Johnson /s/Charles R. Moon Director ---------------------- Charles R. Moon /s/James B. Nicholson Director ---------------------- James B. Nicholson Director ---------------------- Richard N. Vandekieft /s/Gary T. Walther Director ---------------------- Gary T. Walther DOUGLAS & LOMASON COMPANY AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES The consolidated balance sheets of the Company and subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of earnings, shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 1993, together with the related notes and the report of KPMG Peat Marwick, independent Certified Public Accountants, all contained in the Company's 1993 Annual Report to Shareholders, are incorporated herein by reference. The following additional financial data should be read in conjunction with the financial statements in the 1993 Annual Report to Shareholders. All other schedules are omitted, as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes. Financial statements and related schedules of the Registrant have been omitted because the Registrant is primarily an operating company and the subsidiaries included in the consolidated financial statements are totally held.
Index Page ---- Independent Auditors' Report F-2 Schedule V - Property, Plant, and Equipment F-3 Schedule VI - Accumulated Depreciation of Property, Plant, and Equipment F-4 Schedule VIII - Valuation and Qualifying Accounts F-5 Schedule IX - Short-Term Borrowings F-6 Schedule X - Supplementary Income Statement Information F-7
F-1 Independent Auditors' Report The Board of Directors and Shareholders Douglas & Lomason Company: Under date of January 31, 1994, we reported on the consolidated balance sheets of Douglas & Lomason Company and subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of earnings, shareholders' equity, and cash flows for each of the years in the three- year period ended December 31, 1993, as contained in the 1993 Annual Report to Shareholders. These financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the year 1993. In connection with our audits of the aforementioned consolidated financial statements, we also have audited the related financial statement schedules as listed in the accompanying index. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audits. In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein. As discussed in notes 1 and 8 to the consolidated financial statements, the Company changed its method of accounting for income taxes and postretirement benefits other than pensions in 1993. /s/ KPMG Peat Marwick Detroit, Michigan January 31, 1994 F-2 Schedule V DOUGLAS & LOMASON COMPANY AND SUBSIDIARIES Property, Plant, and Equipment Years ended December 31, 1991, 1992, and 1993 (Expressed in thousands of dollars)
Year Ended December 31, 1991 ----------------------------------------------------------- Balance at Balance at December 31, Additions December 31, 1990 at Cost Retirements Other 1991 ------ ------- ----------- ----- ------ Land and land improvements 2,673 51 - - 2,724 Buildings 21,942 1,109 6 - 23,045 Leasehold improvements 766 2 14 - 754 Machinery and equipment 74,038 3,596 584 - 77,050 Transportation equipment 2,449 146 33 - 2,562 Furniture and fixtures 12,858 1,194 962 - 13,090 114,726 6,098 1,599 - 119,225 Year Ended December 31, 1992 ----------------------------------------------------------- Balance at Balance at December 31, Additions December 31, 1991 at Cost Retirements Other 1992 ------ ------- ----------- ----- ------ Land and land improvements 2,724 552 1 - 3,275 Buildings 23,045 1,955 282 - 24,718 Leasehold improvements 754 27 - - 781 Machinery and equipment 77,050 10,600 196 - 87,454 Transportation equipment 2,562 354 186 - 2,730 Furniture and fixtures 13,090 3,256 8 - 16,338 119,225 16,744 673 - 135,296 Year Ended December 31, 1993 ----------------------------------------------------------- Balance at Balance at December 31, Additions December 31, 1992 at Cost Retirements Other (1) 1993 ------ ------- ----------- --------- ------ Land and land improvements 3,275 141 22 - 3,394 Buildings 24,718 3,793 - (400) 28,111 Leasehold improvements 781 321 - - 1,102 Machinery and equipment 87,454 12,426 1,147 (10,800) 87,933 Transportation equipment 2,730 353 226 - 2,857 Furniture and fixtures 16,338 3,426 410 - 19,354 135,296 20,460 1,805 (11,200) 142,751 (1) Reduction relating to provision for plant closings to adjust to estimated net realizable value.
F-3 Schedule VI DOUGLAS & LOMASON COMPANY AND SUBSIDIARIES Accumulated Depreciation of Property, Plant, and Equipment Years ended December 31, 1991, 1992, and 1993 (Expressed in thousands of dollars)
Year Ended December 31, 1991 ---------------------------------------------------------- Additions Charged Balance at to Costs Balance at December 31, and December 31, 1990 Expenses Retirements Other 1991 ------ -------- ----------- ----- ------ Land and land improvements 651 102 - - 753 Buildings 7,685 891 7 - 8,569 Leasehold improvements 408 92 14 - 486 Machinery and equipment 32,294 7,671 495 - 39,470 Transportation equipment 1,855 336 23 - 2,168 Furniture and fixtures 7,107 1,519 916 - 7,710 50,000 10,611 1,455 - 59,156 Year Ended December 31, 1992 ---------------------------------------------------------- Additions Charged Balance at to Costs Balance at December 31, and December 31, 1991 Expenses Retirements Other 1992 ------ -------- ----------- ----- ------ Land and land improvements 753 91 - - 844 Buildings 8,569 927 1 - 9,495 Leasehold improvements 486 7,299 - - 7,785 Machinery and equipment 39,470 260 135 - 39,595 Transportation equipment 2,168 1,851 170 - 3,849 Furniture and fixtures 7,170 4 8 - 7,706 59,156 10,432 314 - 69,274 Year Ended December 31, 1993 ---------------------------------------------------------- Additions Charged Balance at to Costs Balance at December 31, and December 31, 1992 Expenses Retirements Other (2) 1993 ------ -------- ----------- --------- ------ Land and land improvements 844 93 7 - 930 Buildings 9,495 1,130 76 - 10,549 Leasehold improvements 7,785 18 - - 7,803 Machinery and equipment 39,595 8,150 1,055 (6,178) 40,512 Transportation equipment 3,849 324 200 - 3,973 Furniture and fixtures 7,706 2,287 119 - 9,874 69,274 12,002 1,457 (6,178) 73,641 (2) Reduction relating to provision for plant closings to adjust to estimated net realizable value.
F-4 Schedule VIII DOUGLAS & LOMASON COMPANY AND SUBSIDIARIES Valuation and Qualifying Accounts Years ended December 31, 1992, 1991, and 1990 (Expressed in thousands of dollars)
Balance at Charged to Balance at December 31, Costs and December 31, 1990 Expenses Deductions 1991 ------ -------- ---------- ------ None - - - - Balance at Charged to Balance at December 31, Costs and December 31, 1991 Expenses Deductions 1992 ------ -------- ---------- ------ None - - - - Balance at Charged to Balance at December 31, Costs and December 31, 1992 Expenses Deductions 1993 ------ -------- ---------- ------ Other accrued plant closing liabilities - 9,078 - 9,078
F-5 Schedule IX DOUGLAS & LOMASON COMPANY AND SUBSIDIARIES Short-Term Borrowings Years ended December 31, 1992, 1991, and 1990 (Expressed in thousands of dollars, except for percentages)
Weighted Maximum Average Average Amount Amount Interest Balance at Weighted Outstanding Outstanding Rate December 31, Average During the During the During the 1991 Interest Rate Period Period Period ------ ------------- ------ ------ ------ Payable to banks - - - - - Weighted Maximum Average Average Amount Amount Interest Balance at Weighted Outstanding Outstanding Rate December 31, Average During the During the During the 1992 Interest Rate Period Period Period ------ ------------- ------ ------ ------ Payable to banks - - - - - Weighted Maximum Average Average Amount Amount Interest Balance at Weighted Outstanding Outstanding Rate December 31, Average During the During the During the 1993 Interest Rate Period Period Period ------ ------------- ------ ------ ------ Payable to banks 7,000 3.95% 13,000 3,890 3.86%
F-6 Schedule X DOUGLAS & LOMASON COMPANY AND SUBSIDIARIES Supplementary Income Statement Information Years ended December 31, 1993, 1992, and 1991 (Expressed in thousands of dollars)
1993 1992 1991 ------ ------ ------ Maintenance and repairs 9,979 9,261 7,359
Other disclosures under Rule 12-11 are omitted because the individual amounts do not exceed 1 percent of total consolidated net sales. F-7 EX-3.(A) 2 RESTATED ARTICLES OF INCORPORATION RESTATED ARTICLES OF INCORPORATION For use by Domestic Profit Corporations Pursuant to the provisions of Act 284, Public Acts of 1972, the undersigned corporation executes the following Articles: 1. The present name of the Company is: Douglas & Lomason Company 2. The Company identification number assigned by the Bureau is: 060-765 3. All former names of the Company are: None 4. The date of filing the original Articles of Incorporation was: October 9, 1902 The following Restated Articles of Incorporation supersede the Articles of Incorporation as amended and shall be the Articles of Incorporation for the Company: ARTICLE I The name of the Company is: Douglas & Lomason Company ARTICLE II The purpose or purposes for which the Company is formed are: To buy, sell, manufacture all kinds of automobile parts, machinery, automotive body ornamentation of every kind, nature or description; to manufacture, buy, sell and deal in pressure vessels, metal containers, packaging machinery, truck bodies, and any and all products of metal or any other type of material; to acquire or use, convey, sell, rent, lease, mortgage, pledge and deal in property, real, personal or mixed, or any interest therein. In general, to carry on any business in connection therewith and incident thereto not forbidden by the laws of the State of Michigan and with all the powers conferred upon corporations by the laws of the State of Michigan. ARTICLE III The total number of shares of all classes of stock which the Company shall have authority to issue is as follows: (A) 500,000 shares of Preferred Stock without par value (Preferred Stock); and (B) 10,000,000 shares of Common Stock of the par value of $2.00 per share (Common Stock). The designations, voting powers, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions of the above classes of stock and other general provisions relating thereto shall be as follows: PART I PREFERRED STOCK 1. The Board of Directors is expressly authorized at any time, and from time to time, to provide for the issuance of shares of Preferred Stock in one or more series, and for such consideration or considerations as the Board of Directors may determine, with such voting powers, full or limited, or without voting powers, and with such designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions providing for the issue thereof adopted by the Board of Directors, all except as otherwise required by law or these Articles of Incorporation, and including but without limiting the generality of the foregoing, the following: -2- (a) The distinctive designation and number of shares comprising such series, which number may (except where otherwise provided by the Board of Directors in creating such series) be increased or decreased (but not below the number of shares then outstanding) from time to time by action of the Board of Directors. (b) The dividend rate or rates on the shares of such series and the relation which such dividends shall bear to the dividends payable on any other class of capital stock or on any other series of Preferred Stock, the terms and conditions upon which and the periods in respect of which dividends shall be payable, whether and upon what conditions such dividends shall be cumulative and, if cumulative, the date or dates from which dividends shall accumulate. (c) Whether the shares of such series shall be redeemable, and, if redeemable, whether redeemable for cash, property or rights, including securities of any other corporation, at the option of either the holder or the Company or upon the happening of a specified event, the limitations and restrictions with respect to such redemption, the time or times when, the price or prices or rate or rates at which, the adjustments with which and the manner in which such shares shall be redeemable, including the manner of selecting shares of such series for redemption if less than all shares are to be redeemed. (d) The rights to which the holders of shares of such series shall be entitled, and the preferences, if any, over any other series (or of any other series over such series), upon the voluntary or involuntary liquidation, dissolution, distribution or winding up of the Company, which rights may vary depending on whether such liquidation, dissolution, distribution or winding up is voluntary or involuntary, and, if voluntary, may vary at different dates. (e) Whether the shares of such series shall be subject to the operation of a purchase, retirement or sinking fund, and, if so, whether and upon what conditions such purchase, retirement or sinking fund shall be cumulative or noncumulative, the extent to which and the manner in which such fund shall be applied to the purchase or redemption of the shares of such series for retirement or to other corporate purposes and the terms and provisions relative to the operation thereof. (f) Whether the shares of such series shall be convertible into or exchangeable for shares of any other -3- class or of any other series of any class of capital stock or other securities of the Company, or the securities of any other corporation or entity, and, if so convertible or exchangeable, the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same, and any other terms and conditions of such conversion or exchange. (g) The voting powers, full and/or limited, if any, of the shares of such series, and whether and under what conditions the shares of such series (alone or together with the shares of one or more other series) shall be entitled to vote separately as a single class, upon any merger or consolidation or other transaction of the Company, or upon any other matter, including without limitation the election of one or more additional directors of the Company in case of dividend arrearages or other specified events. (h) Whether the issuance of any additional shares of such series, or of any shares of any other series, shall be subject to restrictions as to issuance, or as to the powers, preferences or rights of any such other series. (i) Any other preferences, privileges and powers and relative, participating, optional or other special rights, and qualifications, limitations or restrictions of such series, as the Board of Directors may deem advisable and as shall not be inconsistent with the provisions of these Articles of Incorporation. 2. All shares of Preferred Stock of any one series shall be of equal rank and identical in all respects, except that shares of any one series issued at different times may differ as to the dates from which dividends thereon, if cumulative, shall be cumulative. 3. Shares of Preferred Stock redeemed, converted, exchanged, purchased, retired or surrendered to the Company, or which have been issued and reacquired in any manner, may, upon compliance with any applicable provisions of the Michigan Business Corporation Act, be given the status of authorized and unissued shares of Preferred Stock and may be reissued by the Board of Directors as part of the series of which they were originally a part or may be reclassified into and reissued as part of a new series or as a part of any other series, all subject to the protective conditions or restrictions of any outstanding series of Preferred Stock. -4- PART II COMMON STOCK 1. Except as otherwise required by law or by these Articles of Incorporation, each holder of Common Stock shall have one vote for each share of Common Stock held by the holder on all matters voted upon by the holders of Common Stock. 2. Subject to the preferential dividend rights, if any, applicable to shares of Preferred Stock and subject to applicable requirements, if any, with respect to the setting aside of sums for purchase, retirement or sinking funds for Preferred Stock, the holders of Common Stock shall be entitled to receive, to the extent permitted by law, such dividends as may be declared from time to time by the Board of Directors. 3. In the event of any liquidation, dissolution or winding up of the Company, the holders of Common Stock shall be entitled, after payment or provisions for payment of the debts and other liabilities of the Company and the amounts to which the holders of any Preferred Stock shall be entitled, to share ratably in the remaining net assets of the Company. ARTICLE IV 1. The address of the current registered office is: 24600 Hallwood Court, Farmington Hills, Michigan 48018 2. The name of the current resident agent is: Harry A. Lomason II ARTICLE V The term of the corporate existence is perpetual. ARTICLE VI (A) Except as set forth in paragraph (B) of this Article, the affirmative vote or consent of the holders of not less than 80 percent of all shares of stock of this company (the "Company") entitled to vote in elections of directors, voting for purposes of this Article as one class, shall be required: (1) To adopt any agreement for, or to -5- approve, the merger or consolidation of the Company or any subsidiary (as hereinafter defined) with or into any other person (as hereinafter defined), or (2) To authorize any sale, lease, transfer, exchange, mortgage, pledge or other disposition to any other person of all or substantially all of the assets of the Company or any subsidiary, or (3) To authorize the issuance or transfer by the Company or any subsidiary of any voting securities of the Company or any subsidiary in exchange or payment for the securities or assets of any other person, if, in any such case, as of the record date for the determination of shareholders entitled to notice thereof and to vote thereon or consent thereto, such other person is, or at any time within the preceding twelve months has been, the beneficial owner (as hereinafter defined) of 5 percent or more of the outstanding shares of stock of the Company entitled to vote in elections of directors. If such other person is not, and has not been, a 5 percent beneficial owner, the provisions of this paragraph (A) shall not apply, and the provisions of Michigan law shall apply. (B) The provisions of paragraph (A) of this Article shall not apply, and the provisions of Michigan law shall apply, to any transaction referred to in paragraph (A) of this Article if: (1) Prior to the time that such person became the beneficial owner of 5 percent or more of the outstanding shares of stock of the Company entitled to vote in elections of directors, a majority of the directors of the Company shall have approved a memorandum of understanding with such other person setting forth the principal terms of such transaction and such transaction is substantially consistent therewith, or (2) Subsequent to the time such person became the beneficial owner of 5 percent or more of the outstanding shares of stock of the Company entitled to vote in elections of directors, a majority of the continuing directors of the Company (as hereinafter defined) shall have approved such transaction, or (3) Such transaction is with a corporation of which a majority of the outstanding shares of all classes of stock entitled to vote in elections of directors is owned of record or beneficially by the Company and/or any subsidiary. -6- (C) The affirmative vote or consent of the holders of not less than 80 percent of the outstanding shares of stock of the Company entitled to vote in elections of directors, voting for purposes of this Article as one class, shall be required for the adoption of any plan for the dissolution of the Company if the Board of Directors shall not have, by resolution, recommended to the shareholders the adoption of such plan for dissolution of the Company. If the Board of Directors shall have so recommended to the shareholders such plan for dissolution of the Company, the provisions of Michigan law shall apply. (D) For purposes of this Article: (1) Any specified person shall be deemed to be the beneficial owner of shares of stock of the Company (a) which such specified person or any affiliates or associates of such person (as such terms are hereinafter defined) owns, in whole or in part, directly or indirectly, whether of record or not, (b) which such specified person or any affiliates or associates of such person has the right to acquire pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise, or (c) which are beneficially owned, directly or indirectly (including shares deemed owned through application of clauses (a) and (b) above), by any other person with which such specified person or any affiliates or associates of such person has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of stock of the Company. (2) an "affiliate" or "associate" are defined as set forth in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934 as in effect at the date of adoption of this Article by the shareholders of the Company; (3) a "continuing director" shall mean and include a person who was a member of the Board of Directors of the Company on the date of adoption of this Article by the shareholders of the Company, or a person who was thereafter elected a director of the Company by the shareholders prior to the time that such person acquired a 5 percent stock ownership, or a person recommended by a majority of the then continuing directors in office to succeed a continuing director; (4) a "person" is any individual, corporation or other entity; (5) a "subsidiary" is any corporation at -7- least 50 percent of the voting securities of which are owned, directly or indirectly, by the Company; (E) For purposes of determining whether a person owns beneficially 5 percent or more of the outstanding shares of stock of the Company entitled to vote in elections of directors, the outstanding shares of stock of the Company shall include shares deemed owned through application of clauses (a), (b), or (c) of paragraph (D)(1) above but shall not include any other shares which may be issuable pursuant to any agreement or upon exercise of conversion rights, warrants or options, or otherwise. (F) A majority of the continuing directors of the Board shall have the power and duty to determine for the purposes of this Article, on the basis of information known to the Company, whether (a) such person beneficially owns 5 percent or more of the outstanding shares of stock of the Company entitled to vote in elections of directors, (b) a person is an "affiliate" or "associate" (as defined above) of the person, and (c) the memorandum of understanding referred to above is substantially consistent with the transaction covered thereby. Any such determination shall be conclusive and binding for all purposes of this Article. (G) The shareholders of the Company shall be entitled to statutory appraisal rights to the maximum extent permissible under the provisions of Michigan law, notwithstanding any exception otherwise provided therein, with respect to any transaction described in paragraph (A) of this Article VI which requires the affirmative vote of the holders of not less than 80 percent of all shares of stock of the Company entitled to vote in elections of directors pursuant to the provisions of said paragraph (A). ARTICLE VII Notwithstanding any other provisions of these Articles of Incorporation: (A) No amendment of these Articles of Incorporation shall alter, amend, modify or repeal any or all of the provisions of Article VI or this Article VII of these Articles of Incorporation unless so adopted by the affirmative vote or consent of the holders of not less than 80 percent of the outstanding shares of stock of the Company entitled to vote in elections of directors, voting for purposes of this Article as one class; and (B) The By-Laws of the Company shall not be made, -8- altered, amended, supplemented or repealed by the shareholders of the Company except by the affirmative vote of the holders of not less than 80 percent of the outstanding shares of stock of the Company entitled to vote in elections of directors, voting for purposes of this Article as one class. Nothing contained herein shall detract from the authority of the Board of Directors to make, alter, amend, supplement or repeal any or all provisions of the By-Laws as provided therein. ARTICLE VIII A director of the Company shall not be personally liable to the Company or its shareholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Company or its shareholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) a violation of Section 551(1) of the Michigan Business Corporation Act, or (iv) for any transaction from which the director derived any improper personal benefit. If the Michigan Business Corporation Act is amended after approval by the shareholders of this provision to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Company shall be eliminated or limited to the fullest extent permitted by the Michigan Business Corporation Act, as so amended. Any repeal or modification of the foregoing paragraph by the shareholders of the Company shall not adversely affect any right or protection of a director of the Company existing at the time of such repeal or modification. -9- These Restated Articles of Incorporation were duly adopted on the 17th day of February, 1994, in accordance with the provisions of Section 642 of the Act and were duly adopted by the Board of Directors without a vote of the shareholders. These Restated Articles of Incorporation only restate and integrate and do not further amend the provisions of the Articles of Incorporation as heretofore amended and there is no material discrepency between those provisions and the provisions of these Restated Articles. Signed this 17th day of February, 1994. Douglas & Lomason Company By /s/ Harry A. Lomason II ---------------------------------- Harry A. Lomason II Chairman of the Board and President Name of Person or Organization Remitting Fees: Dickinson, Wright, Moon, VanDusen & Freeman Preparer's Name and Business Telephone Number: Verne C. Hampton, II (313) 223-3500 -10- EX-3.(B) 3 BY-LAWS OF THE REGISTRANT BY-LAWS OF DOUGLAS & LOMASON COMPANY A Michigan Corporation ARTICLE I Shareholders' Meetings Section 1. Annual Meeting. The annual meeting of shareholders shall be held on such date during the month of March or April of each year and at such time and place as shall be fixed by the Board of Directors, for the purpose of the election of directors and for the transaction of such other business as may properly come before the meeting. Any annual meeting not held on the day designated therefore may be held on any day thereafter to which said meeting may be adjourned. Section 2. Special Shareholders' Meetings. Special meetings of shareholders may be called by the Chairman of the Board, the President, or by the Board of Directors. Section 3. Place of Meeting. The Board of Directors may designate any place either within or without the State of Michigan as the place of meeting for any annual meeting or for any special meeting called by the Board of Directors. If no designation is made or if a special meeting be called otherwise than by the Board of Directors, the place of meeting shall be the registered office of the Company in the State of Michigan. Section 4. Notice of Meetings. Written notice of the date, time, place and purposes of a meeting of shareholders shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting, either personally or by mail, to each shareholder of record entitled to vote at the meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail by the Company or its duly authorized agent, addressed to the shareholder at his or her address as it appears on the stock transfer books of the Company, with postage prepaid. Section 5. Quorum. At all meetings of shareholders, except where it is otherwise provided by law, the holders of a majority of the outstanding shares entitled to vote, being present in person or represented by proxy, shall constitute a quorum for all purposes. Section 6. Inspectors of Election. Prior to the annual meeting of shareholders, the Chairman of the Board or the President shall appoint at least two Inspectors of Election to act as inspectors at such meeting and at any meeting of shareholders which may be held during the ensuing year. It shall be the duty of Inspectors of Election to receive and classify all proxies as received, check the proxies with the record of shareholders entitled to vote at such meetings, pass on all matters as to the qualification of shareholders to vote and the validity of proxies, the acceptance or rejection of proxies, tabulate votes, and report to the chairman of the meeting the total number of shares represented at the meeting in person or by proxy, and the result of the voting. Section 7. Voting. At all meetings of shareholders, every shareholder of record as of the applicable record date shall be entitled to vote, either in person or by proxy appointed by an instrument in writing, subscribed by such shareholder or by an authorized agent of the shareholder. Each outstanding share of capital stock is entitled to one vote on each matter submitted to a vote, except as otherwise provided in the Articles of Incorporation. A vote may be cast either orally or in writing, at the discretion of the chairman of the meeting. Section 8. Adjournments. Any annual or special meeting of shareholders, whether or not a quorum is present, may be adjourned from time to time by a majority vote of the shares present in person or by proxy. Unless the Board of Directors fixes a new record date for the adjourned meeting, it is not necessary to give notice of the adjourned meeting if the date, time and place to which the meeting is adjourned are announced at the meeting at which the adjournment is taken and at the adjourned meeting only such business is transacted as might have been transacted at the original meeting. ARTICLE II Directors Section 1. Number and Term of Office. The number of directors constituting the entire Board of Directors shall not be less than three (3) nor more than twelve (12), the exact number of directors to be fixed from time to time only by vote of a majority of the Board then in office. The Board of Directors shall be divided into three classes as nearly equal in number as possible, with the term of office of one class expiring each year. The first class of the Board of Directors shall be elected to hold office for a term expiring at the annual meeting of shareholders in 1984; directors of the second class shall be elected to hold office for a term expiring at the next succeeding annual meeting; and directors of the third class shall be elected to hold office for a term expiring at the third succeeding annual meeting, and in each case, until their respective successors are elected and have qualified, or until their earlier death, resignation or removal. At each annual election held after the initial classification and election in the manner provided above, directors elected to succeed those whose terms expire shall be elected to serve until the end of the third annual meeting of shareholders after their election and until their respective successors are elected and have qualified, or until their earlier death, resignation or removal. When the number of directors is changed, any newly created directorships or any decrease in directorships shall be so apportioned among the classes as to make all classes as nearly equal in number as possible. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. The age limit shall be 70 for directors. A director will not be eligible for re-election at the annual meeting of the shareholders next following the date on which he attains the age of 70, provided, however, that the age limit shall not apply to persons who were directors of the Company at November 17, 1993, and further, the age limit may be waived by the directors in individual cases. If a director is less than age 70 at the time of election but shall be over age 70 at the time of expiration of his term, such director shall serve his full term notwithstanding the age limitation set forth herein. Section 2. Vacancies. During the intervals between annual meetings of shareholders, any vacancy occurring in the Board of Directors caused by resignation, removal, death or other incapacity, and any newly created directorships resulting from an increase in the number of directors shall be filled by a majority vote of the directors then in office, whether or not a quorum. Each director chosen to fill a vacancy shall hold office for the unexpired term in respect of which such vacancy occurred and until his successor is elected and qualified, or until his earlier death, resignation or removal. Each director chosen to fill a newly created directorship shall hold office until the next election for the class for which such director shall have been chosen and until his successor is elected and qualified, or until his earlier death, resignation or removal. Section 3. Removal. A director of the Company may be removed from office for any reason (i) by a two-thirds vote of the full Board in attendance and voting at any meeting, but not by less than a majority of the entire Board then in office, or (ii) by the vote of the holders of two-thirds of the capital stock then outstanding and entitled to vote, at a special meeting of the shareholders called for that purpose. Section 4. Annual and Regular Meetings. The annual meeting of the Board of Directors shall be held on the date of the annual meeting of the shareholders of the Company. There shall be regular meetings of the Board of Directors, in addition to the annual meeting, at the principal office of the Company, or at such other place as may be designated (i) by the Chairman of the Board or the President, provided that notice of such designation of a regular meeting is given personally or by telephone, mail or telegram or similar means of communication to the last known address of each director at least three (3) days before such meeting, or (ii) by a resolution of the Board of Directors. Section 5. Special Meetings. Special meetings of the Board of Directors may be held whenever called by the Chairman of the Board, or the President, or pursuant to resolution of the Board of Directors. Notice thereof shall be given personally or by telephone, mail or telegram or similar means of communication to the last known address of each director at least one (1) day before such meeting. Any director may waive notice of any meeting. Neither the business to be transacted at, nor the purpose of, a special meeting need be specified in the notice or waiver of notice of the meeting. Section 6. Quorum and Voting. A majority of the members of the Board of Directors then in office shall constitute a quorum for the transaction of business, except where otherwise provided by law or the Articles of Incorporation or the By-Laws; but a majority of members present at any regular or special meeting, although less than a quorum, may adjourn the meeting from time to time, without notice. The vote of the majority of members present at a meeting at which a quorum is present constitutes the action of the Board of Directors, unless the vote of a larger number is required by law or the Articles of Incorporation or the ByLaws. Section 7. Action of Directors Without a Meeting. Except as otherwise provided by law, action required or permitted to be taken pursuant to authorization voted at a meeting of the Board of Directors or a committee thereof may be taken without a meeting if, before or after the action, all members of the Board of Directors or of the committee consent thereto in writing. The written consents shall be filed with the minutes of the proceedings of the Board of Directors or committee. The consent has the same effect as a vote of the Board of Directors or committee for all purposes. Section 8. Compensation. The members of the Board of Directors of the Company who are not full time officers or employees of the Company shall receive such reasonable compensation and expenses for their services all as determined by the Board of Directors. Section 9. Nomination of Directors. Nominations for election to the Board of Directors of the Company at a meeting of shareholders may be made by the Board of Directors, on behalf of the Board of Directors by any nominating committee appointed by the Board of Directors, or by any shareholder of the Company entitled to vote for the election of directors at the meeting. Nominations, other than those made by or on behalf of the Board of Directors, shall be made by notice in writing delivered to or mailed, postage prepaid, and received by the Secretary of the Company at least 60 days but no more than 90 days prior to the anniversary date of the immediately preceding annual meeting of shareholders. The notice shall set forth (i) the name and address of the shareholder who intends to make the nomination; (ii) the name, age, business address and, if known, residence address of each nominee; (iii) the principal occupation or employment of each nominee; (iv) the number of shares of stock of the Company which are beneficially owned by each nominee and by the nominating shareholder; (v) any other information concerning the nominee that must be disclosed of nominees in proxy solicitation material pursuant to Regulation 14A of the Securities Exchange Act of 1934 (or any subsequent provision replacing such Regulation); and (vi) the executed consent of each nominee to serve as a director of the Company, if elected. The chairman of the meeting of shareholders may, if the facts warrant, determine that a nomination was not made in accordance with the foregoing procedures, and if the chairman should so determine, the chairman shall so declare to the meeting and the defective nomination shall be disregarded. ARTICLE III Committees Section 1. Audit Committee. There shall be an audit committee consisting of not less than two members of the Board of Directors with the chairman of the audit committee and the members thereof designated by the Chairman of the Board. The audit committee shall recommend to the Board the conditions and term of appointment of independent public accountants for the auditing of the books and accounts of the Company, the scope of audit procedures, the nature of services to be performed for the Company and the fees to be paid to the independent public accountants. From time to time, as considered necessary and desirable, the committee shall confer with such accountants for the exchanging of views relating to the scope and results of the auditing of books and accounts of the Company and shall provide to the Board such assistance as may be required with respect to the corporate and reporting practices of the Company. The audit committee shall perform such other duties as the Board of Directors may prescribe. Section 2. Executive Committee. There shall be an executive committee consisting of either the Chairman of the Board or the president of the Company as chairman of the committee, as determined by the Board of Directors. The other members of the committee shall be selected by the chairman of the committee and may be officers of the Company representing different phases of the Company's operations. The committee shall perform such duties as the Chairman of the Board, the President or the Board of Directors may prescribe. Section 3. Nominating Committee. There shall be a nominating committee consisting of not less than two members of the Board of Directors with the chairman of the committee and the members thereof designated by the Chairman of the Board. The committee shall recommend to the Board of Directors nominees for election as directors or to fill vacancies on the Board and shall perform such other duties as the Board of Directors may prescribe. Section 4. Other Committees. From time to time, the Board of Directors may constitute and appoint any other committee or committees which the Board may deem necessary or proper for the conduct of the Company's business. Any such committee created by the Board of Directors shall have such duties, powers and authority as shall be specified in the resolution constituting such committee. ARTICLE IV Officers Section 1. Number. The officers of the Company shall be a Chairman of the Board, a President, one or more Vice Presidents, one or more of whom may be designated as Senior Vice President or Executive Vice President, a Secretary and a Treasurer. The Board of Directors may also elect a Vice Chairman of the Board and a Controller and elect or appoint one or more Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers. The Board of Directors shall have power to create such other offices as they may from time to time deem expedient. Section 2. Election and Term of Office. The officers of the Company shall be elected annually or appointed by the Board of Directors at the annual meeting of the Board of Directors held on the date of the annual meeting of shareholders. If the election of officers shall not be held at that time, such election shall be held as soon thereafter as convenient. Each officer shall hold office until his successor shall have been duly elected and qualified or until his death, resignation or removal in the manner hereafter provided. Section 3. Removal and Vacancies. Any officer elected or appointed by the Board of Directors may be removed at any time with or without cause by the Board of Directors. Vacancies among officers of the Company during the year may be filled by the Board of Directors for the unexpired portion of the term. Section 4. Chief Executive and Chief Operating Officers. The Board of Directors shall, from time to time, designate one of the officers of the Company as the chief executive officer of the Company and may, from time to time, but shall not be required to do so, designate one of the officers of the Company as the chief operating officer of the Company. The chief executive officer shall, subject to the direction of the Board of Directors, have general supervision of the business of the Company and shall supervise the departments, officers and employees thereof, and shall prescribe duties of other officers and employees insofar as they are not specifically provided for by the By-Laws or by resolution of the Board of Directors. He shall be an ex-officio member of all standing committees of the Board of Directors and the Company. The chief operating officer shall have such duties as may be designed by the chief executive officer or by the Board of Directors. Section 5. Chairman of the Board. The Chairman of the Board shall preside at all meetings of the shareholders and of the Board of Directors. He shall perform such other duties as may be designated by the Board of Directors. Section 6. Vice Chairman of the Board. The Vice Chairman of the Board shall perform such duties as may be designed by the Chief Executive Officer or by the Board of Directors. In the absence or disability of the Chairman of the Board and the President, he shall preside at meetings of shareholders and the Board of Directors. Section 7. President. In the absence or incapacity of the Chairman of the Board, the President shall perform the duties of that office. He shall perform such duties as may be designated by the chief executive officer, subject to the direction of the Board of Directors, or by the Board of Directors. Section 8. Vice Presidents. In the absence or incapacity of the President, one of the Vice Presidents in such succession or order as shall be determined by the Board of Directors shall perform the duties of that office. The order in which the Vice Presidents are named in any election shall establish such determination of seniority in the absence of any more specific determination by the Board of Directors. The Vice Presidents shall perform such duties and be vested with such other powers as the Board of Directors, the Chairman of the Board or the President may from time to time prescribe. Section 9. Secretary, Treasurer and Controller. The Secretary, the Treasurer, and the Controller shall perform such duties as are incident to their offices, or are properly required of them by the Chairman of the Board, the President, the Board of Directors, or are assigned to them by the Articles of Incorporation or these By-Laws. Section 10. Assistant Secretary and Assistant Treasurer. The Assistant Secretary or Assistant Secretaries and Assistant Treasurer or Assistant Treasurers shall perform such duties as shall be assigned to them by the officers or the Board of Directors. The Assistant Secretary designated by the chief executive officer of the Company shall, in the absence of the Secretary, perform the duties and exercise the powers of the Secretary, and the Assistant Treasurer designated by the chief executive officer of the Company shall, in the absence of the Treasurer, perform the duties and exercise the powers of the Treasurer. Section 11. Other Officers. Other officers appointed by the Board of Directors shall exercise such powers and perform such duties as may be delegated to them by the officers or the Board of Directors of the Company. Section 12. Compensation. The compensation of the officers of the Company shall be fixed by the Board of Directors. Section 13. Additional Duties and Authorities. All of the officers of the Company shall have authority to execute on behalf of the Company any and all contracts, agreements, bonds, deeds, mortgages, leases or other obligations of the Company arising in the regular course of business of the Company. ARTICLE V Capital Stock Section 1. Certificates. The interest of each shareholder of the Company shall be evidenced by certificates for shares of stock, certifying the number of shares represented thereby and in such form not inconsistent with the Articles of Incorporation as the Board of Directors may from time to time prescribe. The stock certificates shall be signed by the Chairman of the Board, the President or a Vice President and also by the Secretary or an Assistant Secretary or by the Treasurer or an Assistant Treasurer. The seal of the Company may be engraved on the certificates instead of being manually affixed, and the signatures of officers may be facsimile signatures if the certificate is countersigned by a transfer agent or registered by a registrar other than the Company itself. In case any officer who has signed or whose facsimile signature has been placed upon any certificate shall have ceased to be such officer before the certificate is issued, the certificate may be issued by the Company with the same effect as if such officer had not ceased to be such officer at the time of its issue. All certificates of stock surrendered to the Company for transfer shall be cancelled and, except in the case of lost or destroyed certificates as hereinafter provided, no new certificate shall be issued until the former certificate or certificates for the shares represented thereby shall have been surrendered and cancelled. Section 2. Lost Certificates. When a certificate of stock previously issued is alleged to have been lost or destroyed, a new certificate may be issued therefor upon such terms and indemnity to the Company as the Board of Directors may prescribe. Section 3. Transfer of Shares. Transfer of shares of stock of the Company shall be made only on the stock transfer books of the Company, and the Company may decline to recognize the holder of any certificate of stock of the Company as a shareholder until the shares represented by such certificate are transferred into his or her name on the stock transfer books of the Company. The Company shall be entitled to treat the holder of record of any shares of stock as the absolute owner thereof, and shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law. The Board of Directors may appoint one or more stock transfer agents and registrars (which functions may be combined), and may require all stock certificates to bear the signature of such transfer agent and such registrar. Section 4. Fixing of Record Date. For the purpose of determining shareholders entitled to notice of and to vote at a meeting of shareholders or any adjournment thereof, or for the purpose of determining shareholders entitled to receive payment of a dividend or for the purpose of any other action, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders. The date shall not be more than sixty (60) nor less than ten (10) days before the date of the meeting, nor more than sixty (60) days before any other action. ARTICLE VI Miscellaneous Section 1. Seal. The corporate seal of the Company shall consist of the words "Douglas & Lomason Company" around the periphery of a circle, with the words "Corporate Seal" within the circle formed by the name of the Company. Section 2. Fiscal Year. The fiscal year of the Company shall begin on the first day of January in each year and end on the thirty-first day of December in each year. Section 3. Indemnification of Directors, Officers and Employees. The Company shall indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director, officer, employee or agent of the Company, or is or was serving another organization or entity at the request of the Company. Such indemnification shall be to the fullest extent, and shall be determined in such manner, as now or hereafter permitted by law. The indemnification shall continue to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors, personal representatives and administrators of such person. Neither the Company nor its directors or officers nor any person acting on its behalf shall be liable to anyone for any determination as to the existence or absence of conduct which would provide a basis for making or refusing to make any payment hereunder or for taking or omitting to take any other action hereunder, in reliance upon the advice of counsel. ARTICLE VII Amendment of By-Laws The By-Laws may be altered, amended, supplemented or repealed in whole or in part and new By-Laws may be adopted either: (a) By the affirmative vote of the holders of record of not less than 80 percent of the outstanding shares of stock of the Company entitled to vote in election of directors, voting for purposes of this Article as one class; or (b) By the affirmative vote of a majority of the Board of Directors at any meeting of the Board, or by written consent signed by all members of the Board of Directors in accordance with Section 7 of Article II of these By-Laws; provided, however, no such alteration, amendment or repeal of Article II, Sections 1 or 2 (number and term of office and vacancies) or this Article VII of these By-Laws shall be made by the Board of Directors or be effective unless such alteration, amendment or repeal shall be first approved by a majority of those members of the Board of Directors who would qualify as continuing directors within the meaning of Article XII of the Articles of Incorporation. EX-13 4 EXCERPTS FROM ANNUAL REPORT TO SHAREHOLDERS Management's Discussion and Analysis of Financial Condition and Results of Operation LIQUIDITY AND CAPITAL RESOURCES Funds provided from operations of $13.9 million and net proceeds from short- term borrowings of $7.0 million were the Company's primary sources of cash in 1993. The funds provided from operations were negatively impacted by the decline in operating earnings which were $11.2 million before provision for plant closings in 1993 compared to $15.2 million in 1992. The funds generated from operations and the short-term borrowings enabled the Company to purchase additional property, plant and equipment amounting to $20.5 million and to reduce long-term debt by $5.3 million. A provision for plant closings was recorded in the fourth quarter of 1993, but did not affect cash in 1993 (note 9). However, it is expected to require approximately $5.0 million in 1994, with the remaining $5.0 million paid by 1996. Management expects to fund these costs with cash provided by operations or short-term lines of credit. At December 31, 1993, the Company had available borrowings of $13.0 million from its lines of credit at two banks in addition to $2.7 million in cash. Management believes it has adequate sources of liquidity to meet the Company's operating and capital expenditure requirements in 1994. RESULTS OF OPERATIONS - 1993 VERSUS 1992 Net Sales Net sales of $424.8 million for 1993 increased 9% compared to 1992 net sales of $391.2 million. Sales of products for Chrysler's highly successful LH model and increased sales at the Richmond, Michigan plant prior to its closing in May, 1993 were the significant components of the 1993 sales increase. The decline in sales as a result of the planned plant closings will be more than offset by the start-up of new production in 1994. Cost of Sales Cost of sales as a percentage of net sales increased to 92.7% in 1993 compared to 91.6% in 1992. This unfavorable trend in both the third and fourth quarter of 1993 is a direct result of the excess start-up costs at the new plant in Saltillo, Mexico, combined with an increase in the price of steel which is a major component in automotive seating systems. Price concessions to customers also adversely affected the cost of sales ratio. The total cost reduction estimated to be realized from the plant closings is expected to approximate $3.0 million in 1994 and $5.0 million annually thereafter. Selling, General and Administrative Expense Selling, general and administrative expenses in 1993 increased approximately $1.8 million from 1992, but remained constant as a percentage of sales. Additional staffing for Sales and Information Services was the principal component of this increase. Depreciation Expense Depreciation expense in 1993 increased $1.6 million or 15% from 1992. The increase was attributable to significantly higher capital expenditures of $20.5 million in 1993 and $16.7 million in 1992. The effect of the plant closings is expected to result in a decrease in depreciation expense of approximately $1.0 million in 1994. Interest Expense Interest expense in 1993 decreased $.8 million or 23% from 1992. This decrease is attributable to lower average debt and lower interest rates. Net Earnings (Loss) Net loss in 1993 of $7.2 million or $1.70 per share resulted principally from the change in accounting principle of $3.8 million or $.90 per share and the provision for plant closings of $9.6 million or $2.28 per share. Net earnings from operations in 1993, exclusive of the two items mentioned above, were $6.2 million or $1.47 per share compared to $8.8 million or $2.25 per share in 1992. The 1993 net earnings from operations before the provision for plant closings were negatively impacted by excessive start-up costs at the Saltillo, Mexico plant and an increase in the price of steel which is a major component in automotive seating systems. Customer price concessions also affected net sales and net earnings adversely. The fourth quarter net loss of $7.9 million or $1.86 per share was significantly contributed to by the provision for plant closings of $9.6 million or $2.28 per share. Net earnings from operations before the provision for plant closings in the fourth quarter were $1.7 million or $.42 per share compared to $3.0 million or $.72 per share in 1992. In November 1992, FASB issued Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits," which requires employers to record postemployment benefit costs that are probable and estimable over the period during which the benefit vests or accumulates. The provisions of Statement No. 112 are effective for fiscal years beginning after December 15, 1993. The Company does not expect implementation of this Statement in 1994 to have any effect on its financial statements. RESULTS OF OPERATIONS - 1992 VERSUS 1991 Net Sales Net sales of $391.2 million for 1992 increased 4.1% compared to 1991 sales of $375.6 million. This increase was attributable to improved sales in the first quarter of 1992 as compared to the first quarter of 1991 when sales were negatively impacted by the events in the Persian Gulf. In addition, fourth quarter 1992 sales showed improvement over the same period of 1991, and this improvement continued into the first quarter of 1993. Cost of Sales Cost of sales as a percentage of net sales increased .5% in 1992 compared to 1991. Start-up costs at a new plant in Mexico, costs related to the expected downsizing of a domestic plant and price reductions due to continued customer pressure were the principal components of the cost of sales (as a percentage of sales) increase. Page 16 Selling, General and Administrative Expenses Selling, general and administrative expenses increased $1.2 million in 1992 compared to 1991 principally as a result of additional staffing in Sales, Engineering and Information Services to position the Company as a full service manufacturer. Depreciation Expense Depreciation expense in 1992 decreased $.2 million or approximately 2% from 1991. The decline was attributable to significantly lower capital expenditures in 1991 and 1990. Capital expenditures of $16.7 million in 1992 resulted in increased depreciation expense. Interest Expense Interest expense in 1992 decreased $1.9 million or approximately 35% from 1991. This decrease was primarily attributable to substantial debt reduction of $21.3 million in 1992, $18.7 million in 1991 and $16.9 million in 1990 for a total of $56.9 million in the three year period. Net Earnings Net earnings in 1992 of $8.8 million compared favorably to the net earnings in 1991 of $7.2 million. Although net earnings increased 21.2%, the net earnings per share of $2.25 in 1992 were lower than the net earnings per share of $2.29 in 1991 as a direct result of the additional 1,046,277 shares outstanding principally due to the offering of common stock in April, 1992.
Douglas & Lomason Company and Subsidiaries Selected Financial and Other Data (In thousands of dollars except as to per share and other data) 1993 1992 1991 1990 1989 1988 For the Year Net sales $424,843 $391,178 $375,618 $418,118 $424,926 $325,498 Cost of sales 393,935 358,191 342,202 385,302 406,470 313,943 Gross profit 30,908 32,987 33,416 32,816 18,456 11,555 Capital additions 20,460 16,744 6,098 8,749 16,708 26,805 Depreciation expense 12,002 10,432 10,611 11,666 11,169 7,636 Interest expense 2,706 3,530 5,416 8,028 8,322 3,787 Income tax expense (benefit) (2,607) 3,823 4,650 3,102 (2,296) (3,692) Earnings (loss) before cumulative effect for change in accounting principle (3,411) 8,770 7,235 4,964 (3,372) (4,629) Net earnings (loss) (7,168) 8,770 7,235 4,964 (3,372) (3,969) At Year End Total assets $174,283 $156,351 $139,192 $148,820 $169,975 $161,916 Working capital 36,205 50,633 45,723 52,689 31,123 33,025 Property, plant and equipment less accumulated depreciation 69,110 66,022 60,070 64,726 67,886 62,525 Long-term debt 21,826 25,655 46,486 67,627 56,253 48,911 Shareholders' equity 77,675 85,881 54,204 47,382 41,408 45,096 Per Share Data Book value $ 18.37 $ 20.47 $ 17.21 $ 15.05 $ 13.68 $ 15.09 Net earnings (loss) per share (1.70) 2.25 2.29 1.57 (1.12) (1.31) Dividends .40 .30 .14 .07 .25 .33 Other Data Number of employees 5,697 5,817 5,562 5,424 6,285 6,076 Number of shareholders 806 846 858 887 903 891 Weighted average number of common and common equivalent shares outstanding 4,214,372 3,890,115 3,154,365 3,159,311 3,018,002 3,033,798 Per share data and outstanding shares for 1991 and prior have been retroactively adjusted to reflect the 1992 3-for-2 stock split distributed April 2, 1992.
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Douglas & Lomason Company and Subsidiaries Consolidated Balance Sheets December 31, 1993 and 1992 1993 1992 Assets Current assets: Cash and cash equivalents $ 2,745,818 $ 8,238,779 Accounts receivable (note 6) 70,458,109 55,598,421 Inventories (note 2) 14,435,433 18,713,466 Deferred tax assets (note 5) 5,542,000 2,002,392 Prepaid expenses and other current assets 1,042,843 1,106,008 Total current assets 94,224,203 85,659,066 Property, plant and equipment at cost less accumulated depreciation (notes 3, 4 and 9) 69,109,773 66,022,118 Other assets 10,949,345 4,669,945 $174,283,321 $156,351,129 Liabilities and Shareholders' Equity Current liabilities: Short-term borrowings (note 4) $ 7,000,000 $ --- Current installments of long-term debt (note 4) 5,829,315 5,330,679 Accounts payable 31,100,497 19,848,825 Accrued payroll 3,280,660 3,258,727 Income taxes payable 800,149 2,194,024 Accrued plant closing expenses (note 9) 5,065,000 --- Other accrued expenses (note 7) 4,943,872 4,394,155 Total current liabilities 58,019,493 35,026,410 Long-term debt, excluding current installments (note 4) 21,825,630 25,654,945 Postretirement benefits, other than pensions (note 8) 6,521,094 --- Deferred income taxes (note 5) 992,000 6,045,000 Other liabilities (note 9) 9,250,484 3,743,797 Shareholders' equity (notes 4 and 11): Preferred stock, no par value. Authorized 500,000 shares; no shares issued --- --- Common stock, $2 par value. Authorized 10,000,000 shares; issued 4,227,220 in 1993 (4,194,945 in 1992) 8,454,440 8,389,890 Other capital 27,986,476 27,383,113 Retained earnings 41,253,360 50,107,974 Foreign currency translation adjustment (19,656) --- Total shareholders' equity 77,674,620 85,880,977 $174,283,321 $156,351,129 See accompanying notes to consolidated financial statements.
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Douglas & Lomason Company and Subsidiaries Consolidated Statements of Earnings Years ended December 31, 1993, 1992 and 1991 1993 1992 1991 Net sales $424,842,681 $391,178,399 $375,617,887 Cost of sales 393,934,783 358,190,994 342,202,103 Gross profit 30,907,898 32,987,405 33,415,784 Selling, general and administrative expenses 19,670,926 17,834,224 16,624,742 Provision for plant closings (note 9) 15,000,000 --- --- Operating income (loss) (3,763,028) 15,153,181 16,791,042 Other income (expenses): Interest expense (2,706,072) (3,530,314) (5,415,669) Interest income and other, net 451,526 970,020 509,894 (2,254,546) (2,560,294) (4,905,775) Earnings (loss) before income taxes and cumulative effect of change in accounting principle (6,017,574) 12,592,887 11,885,267 Income tax (benefit) expense (note 5) (2,607,000) 3,823,000 4,650,000 Earnings (loss) before cumulative effect of change in accounting principle (3,410,574) 8,769,887 7,235,267 Cumulative effect at January 1, 1993 of change in accounting for postretirement benefits other than pensions, net of income tax benefit (note 8) (3,756,930) --- --- Net earnings (loss) $ (7,167,504) $ 8,769,887 $ 7,235,267 Earnings (loss) per share before cumulative effect of change in accounting principle $ (.80) $ 2.25 $ 2.29 Cumulative per share effect of change in accounting for postretirement benefits other than pensions, net of income tax benefit (.90) --- --- Net earnings (loss) per share $ (1.70) $ 2.25 $ 2.29 Dividends per share $ .40 $ .30 $ .14 Weighted average number of common and common equivalent shares outstanding 4,214,372 3,890,115 3,154,365 See accompanying notes to consolidated financial statements.
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Douglas & Lomason Company and Subsidiaries Consolidated Statements of Shareholders' Equity Years ended December 31, 1993, 1992 and 1991 Foreign Currency Common Other Retained Translation Shareholders' Stock Capital Earnings Adjustment Equity Balance at December 31, 1990 $6,295,836 $ 5,300,866 $35,785,422 $ - $47,382,124 Net earnings - - 7,235,267 - 7,235,267 Dividends, $.14 per share - - (419,772) - (419,772) Issuance of 750 shares under employee stock option plan 1,500 4,625 - - 6,125 Balance at December 31, 1991 6,297,336 5,305,491 42,600,917 - 54,203,744 Net earnings - - 8,769,887 - 8,769,887 Dividends, $.30 per share - - (1,262,830) - (1,262,830) Issuance of 114,157 shares under employee stock option plans, net of 1,868 shares received as consideration for exercised stock options 228,314 1,310,466 - - 1,538,780 Redemption of 174 fractional shares as a result of 3-for-2 stock split (348) 348 - - - Issuance of 932,294 shares through public offering,net of expenses 1,864,588 20,766,808 - - 22,631,396 Balance at December 31, 1992 8,389,890 27,383,113 50,107,974 - 85,880,977 Net loss - - (7,167,504) - (7,167,504) Dividends, $.40 per share - - (1,687,110) - (1,687,110) Foreign currency translation adjustment - - - (19,656) (19,656) Issuance of 32,275 shares under employee stock option plan 64,550 603,363 - - 667,913 Balance at December 31, 1993 $8,454,440 $27,986,476 $41,253,360 $(19,656) $77,674,620 See accompanying notes to consolidated financial statements.
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Douglas & Lomason Company and Subsidiaries Consolidated Statements of Cash Flows Years ended December 31, 1993, 1992 and 1991 1993 1992 1991 Cash flows from operating activities: Net earnings (loss) $(7,167,504) $ 8,769,887 $ 7,235,267 Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: Provision for plant closings 15,000,000 --- --- Cumulative effect of change in accounting for post- retirement benefits other than pensions, net of tax benefit 3,756,930 --- --- Depreciation 12,002,047 10,431,627 10,611,232 Net (gain) loss on sale of property, plant and equipment (68,241) 58,469 69,332 Provision for deferred income taxes (6,386,000) (14,000) (33,000) Changes in operating assets and liabilities: Increase in accounts receivable (14,859,688) (7,125,536) (3,128,062) Decrease (increase) in inventories 4,278,033 (195,438) 4,681,905 Decrease (increase) in prepaid expenses and other assets (4,216,235) (1,039,454) 2,426,654 Increase (decrease) in accounts payable 11,251,672 7,101,746 (1,593,978) Increase (decrease) in income taxes payable and accrued expenses (822,225) (1,079,099) 3,635,872 Increase in other liabilities 1,151,245 400,190 301,586 Net cash provided by operating activities 13,920,034 17,308,392 24,206,808 Cash flows from investing activities: Proceeds from the sale of property, plant and equipment 416,291 301,283 74,034 Capital expenditures (20,459,754) (16,743,833) (6,098,337) Net cash used in investing activities (20,043,463) (16,442,550) (6,024,303) Cash flows from financing activities: Net proceeds from public stock offering --- 22,631,396 --- Proceeds from issuance of long-term debt --- --- 20,000,000 Principal payments on long- term debt (5,330,679) (21,341,271) (38,715,962) Proceeds from short-term borrowings, net 7,000,000 --- --- Proceeds from exercised stock options, net 667,913 1,538,780 6,125 Dividends paid (1,687,110) (1,262,830) (419,772) Net cash provided (used) in financing activities 650,124 1,566,075 (19,129,609) Effect of translation adjustment on cash (19,656) --- --- Net increase (decrease) in cash and cash equivalents (5,492,961) 2,431,917 (947,104) Cash and cash equivalents at beginning of year 8,238,779 5,806,862 6,753,966 Cash and cash equivalents at end of year $ 2,745,818 $ 8,238,779 $ 5,806,862 Supplemental disclosures of cash flow information: Cash paid during the year for: Interest $ 2,716,378 $ 3,561,905 $ 5,356,252 Income taxes $ 5,078,975 $ 3,942,491 $ 2,658,256 See accompanying notes to consolidated financial statements.
Page 21 Douglas & Lomason Company and Subsidiaries Notes to Consolidated Financial Statements December 31, 1993, 1992 and 1991 (1) Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the Accounting financial statements of Douglas & Lomason Company and its wholly owned subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation. The Company's investment in a 50% owned affiliate is accounted for on the equity method. Cash Equivalents The Company considers all investments with original maturities of three months or less to be cash equivalents. Financial Instruments Financial instruments consist primarily of cash equivalents, accounts receivable, accounts payable and bank debt. At December 31, 1993, the Company believes the fair value of these financial instruments approximates the carrying amount. Inventories Inventories are stated at the lower of cost or market (net realizable value). Cost for substantially all inventories is determined by the last-in, first-out (LIFO) cost method. Tooling in process represents unique manufacturing equipment costs incurred, which are partially reimbursed by customers, and the balance amortized over the years the tools benefit. Tooling costs that benefit future periods, less current amortization, are included in other assets. Property, Plant and Equipment Depreciation is computed using both straight line and accelerated methods over the estimated useful lives of the assets: 10 to 20 years for land improvements, 10 to 40 years for buildings and 2 to 12 years for machinery and equipment. The cost and accumulated depreciation of a fully depreciated asset remain in the accounts. When a sale or abandonment occurs, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is reflected in earnings. Repairs and maintenance are charged to earnings as incurred; renewals and betterments are capitalized. Income Taxes Effective January 1, 1993, the Company adopted Statement of Financial Standards No. 109, "Accounting for Income Taxes." For the years ended December 31, 1992 and 1991, income taxes were determined in accordance with Statement of Financial Accounting Standards No. 96, "Accounting for Income Taxes." Both Statement 109 and Statement 96 require income taxes be determined using the asset and liability method. Accordingly, deferred income taxes are recognized for the tax consequences of "temporary differences" by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The adoption of Statement 109 did not have a material effect on the 1993 Consolidated Financial Statements. Supplemental Health Care Retirement Benefits Effective January 1, 1993, the Company adopted Statement of Financial Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," which establishes a new accounting principle for the cost of retiree health care and other postretirement benefits (also see note 8). Prior to 1993, the Company recognized those benefits on the pay-as-you-go method. The cumulative effect of the change in accounting for postretirement benefits other than pensions is reported in the 1993 consolidated statement of earnings. Translation of Foreign Currencies Assets and liabilities of foreign subsidiaries are translated at the rate of exchange in effect on the balance sheet date; income and expenses are translated at the average rates of exchange prevailing during the year. The resulting translation adjustments are recorded directly into a separate component of stockholders' equity. Reclassifications Certain amounts related to prior years have been reclassified to conform with 1993 presentation. (2) Inventories Substantially all inventories are valued on the last-in, first-out (LIFO) cost method. In the opinion of management, the first-in, first-out (FIFO) cost approximates replacement cost. Inventories consist of the following:
1993 1992 Raw materials $12,741,266 $13,133,590 Work in process 5,327,528 5,534,457 Tooling in process 2,010,539 5,680,314 Finished goods 3,356,670 3,323,092 Inventories at FIFO basis 23,436,003 27,671,453 Less adjustment of certain inventories to a LIFO basis 9,000,570 8,957,987 $14,435,433 $18,713,466
During 1992 and 1991, certain LIFO inventory layers were reduced. During 1992, this reduction resulted in charging higher inventory costs prevailing in previous years to costs of goods sold in 1992, thus increasing costs of goods sold by approximately $100,000 above the amount that would have resulted from liquidating inventory recorded at December 31, 1992 prices. During 1991, this reduction resulted in charging lower inventory costs prevailing in previous years to costs of goods sold in 1991, thus reducing costs of goods sold by approximately $600,000 below the amount that would have resulted from liquidating inventory recorded at December 31, 1991 prices. Page 22 (3) Property, Plant and Equipment A summary of property, plant and equipment follows:
1993 1992 Land and land improvements $ 3,393,836 $ 3,275,305 Buildings and building improvements 29,213,262 25,498,711 Machinery and equipment 107,468,485 102,829,928 Construction in process 2,675,640 3,691,888 142,751,223 135,295,832 Less accumulated depreciation 73,641,450 69,273,714 $ 69,109,773 $ 66,022,118
Amounts included above, which have been capitalized under capital lease are as follows:
1993 1992 Machinery and equipment $ 6,181,567 $ 6,181,567 Less accumulated depreciation 3,508,462 3,030,958 $ 2,673,105 $ 3,150,609
(4) Indebtedness At December 31, 1993, the Company had unsecured lines of credit aggregating $20 million with two banks. Interest only payments are due at various dates at interest rates based on various factors which are at or below the banks' prime rate. At December 31, 1993, $7.0 million was outstanding on these lines of credit, and the effective rate of interest was 3.9 percent. These lines of credit expire on April 30, 1994, but are expected to be renewed at that time. Long-term debt is summarized as follows:
1993 1992 Notes payable to banks $23,437,500 $27,812,500 Capital leases 2,217,445 3,173,124 Other 2,000,000 --- 27,654,945 30,985,624 Less current installments 5,829,315 5,330,679 $21,825,630 $25,654,945
At December 31, 1993, the Company had an unsecured term loan with two banks totaling $15.0 million. Quarterly payments of principal and interest (at 7.95%) are required with the final balance due October 31, 1999. The aggregate maturities on this loan are $2,500,000 each year from 1994 through 1999. The Company had another unsecured term loan agreement with two banks totaling $8,437,500 at December 31, 1993. Quarterly payments of principal and interest (at 9.95%) are required with the final balance due May 31, 1998. The aggregate maturities on this loan are $1,875,000 each year from 1994 through 1997; and $937,500 in 1998. During 1993, the Company acquired intangible assets in exchange for a $2.0 million obligation. This obligation is payable in five equal annual installments from 1994 through 1998. Under a capital lease agreement, the Company has agreed to purchase certain equipment leased at a nominal amount on the expiration date. The following is a schedule by year of future minimum lease payments under this capital lease together with the present value of the total minimum lease payments: Years ending December 31: 1994 $1,236,306 1995 1,236,306 Total minimum lease payments 2,472,612 Less amount representing interest at 9.94% 255,167 Present value of minimum lease payments $2,217,445
The bank notes and lease agreement contain restrictive covenants regarding consolidated working capital, net worth and total liabilities. The Company was in compliance with all such covenants at December 31, 1993. (5) Income Taxes Earnings (loss) before income taxes and cumulative effect of change in accounting, as shown in the consolidated statements of earnings consist of the following:
1993 1992 1991 Domestic $(4,344,385) $12,891,117 $11,830,978 Foreign (1,673,189) (298,230) 54,289 $(6,017,574) $12,592,887 $11,885,267
Components of income tax expense (benefit) are as follows:
1993 1992 1991 Current: Federal $ 3,438,000 $3,556,000 $4,128,000 State 343,000 160,000 526,000 Foreign (2,000) 121,000 29,000 3,779,000 3,837,000 4,683,000 Deferred: Federal (4,969,000) (225,000) (43,000) State (580,000) 211,000 10,000 Foreign (837,000) --- --- (6,386,000) (14,000) (33,000) $(2,607,000) $3,823,000 $4,650,000
Page 23 A reconciliation of the "expected" income tax expense (benefit) based on the federal corporate income tax rate of 34% to the actual income tax expense (benefit) is as follows:
1993 1992 1991 Expected income tax expense (benefit) $(2,046,000) $4,281,000 $4,041,000 State income taxes, net of federal income tax benefit (156,000) 245,000 354,000 Research and development tax credits (332,000) (700,000) - Foreign tax rate differential (268,000) 222,000 11,000 Other items, net 195,000 (225,000) 244,000 Actual income tax expense (benefit) $(2,607,000) $3,823,000 $4,650,000
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 1993 are as follows:
Deferred Deferred Tax Assets Tax Liabilities Plant and equipment, due to difference in depreciation $ 1,696,000 $6,745,000 Accrued postretirement benefits deductible for tax purposes when paid 2,768,000 --- Other expenses deductible for tax purposes when paid 2,377,000 --- Accrued plant closing costs 5,397,000 --- Other items, net 765,000 246,000 $13,003,000 6,991,000 Less valuation allowance on deferred tax assets (1,463,000) --- $11,540,000 $6,991,000
Management has determined, based on the Company's history of domestic taxable income and its expectation of the future, that domestic operating income of the Company will likely be sufficient to fully recognize these net deferred tax assets. The Company has a foreign tax net operating loss carry forward of approximately $2.3 million at December 31, 1993, which will expire if not used by 1998. A valuation allowance is recorded for the total amount of certain foreign deferred tax assets because of the uncertainty of their ultimate realization. (6) Industry Segment The Company's operations are within the following industry segments: Segment automotive products, material handling equipment and specialized truck bodies and trailers. A summary of certain segment information and a reconciliation to the related consolidated financial statement amounts follow:
1993 ---------------------------------------------- Automotive All Other Products Segments Consolidated ------------ ----------- ------------ Sales to customers $397,356,003 $27,486,678 $424,842,681 Operating profit (loss) (note 9) $ (1,601,322) $ 1,456,917 $ (144,405) General corporate expense, net (3,167,097) Interest expense (2,706,072) Loss before income taxes and cumulative effect of change in accounting principle $ (6,017,574) Identifiable assets at December 31 $149,772,959 $12,032,522 $161,805,481 Corporate assets 12,477,840 Total assets $174,283,321 1992 ---------------------------------------------- Automotive All Other Products Segments Consolidated ------------ ----------- ------------ Sales to customers $363,299,730 $27,878,669 $391,178,399 Operating profit (loss) $ 18,268,931 $ (258,530) $ 18,010,401 General corporate expense, net (1,887,200) Interest expense (3,530,314) Earnings before income taxes $ 12,592,887 Identifiable assets at December 31 $135,277,457 $ 9,217,223 $144,494,680 Corporate assets 11,856,449 Total assets $156,351,129 1991 ---------------------------------------------- Automotive All Other Products Segments Consolidated ------------ ----------- ------------- Sales to customers $348,754,400 $26,863,487 $375,617,887 Operating profit (loss) $ 20,719,055 $ (396,288) $ 20,322,767 General corporate expense, net (3,021,831) Interest expense (5,415,669) Earnings before income taxes $ 11,885,267 Identifiable assets at December 31 $119,190,828 $10,865,989 $130,056,817 Corporate assets 9,135,513 Total assets $139,192,330
Page 24 The automotive products operations relate principally to the production of fully trimmed seating, seat frame assemblies and mechanisms, energy management systems and body trim used as components in the assembly of passenger cars and trucks. Automotive product sales for 1993 include revenue from Chrysler, Ford and General Motors representing 51, 25 and 15 percent, respectively, of total automotive products sales (50, 25 and 18 percent in 1992 and 43, 28 and 20 percent in 1991). Automotive product sales to Bloomington-Normal Seating Company (a 50% owned affiliate) approximated $18.7 million, $23.6 million and $24.4 million for the years ended December 31, 1993, 1992 and 1991, respectively. Depreciation and capital expenditures of the automotive products segment for the year ended December 31, 1993 were $10.7 and $18.2 million, respectively ($9.6 million and $15.7 million in 1992, and $9.8 million and $5.3 million in 1991). At December 31, 1993, the Company's trade accounts receivable due from Chrysler, Ford and General Motors represents 55, 16 and 12 percent, respectively, of total consolidated accounts receivable (54, 18 and 14 percent in 1992). Total accounts receivable from Bloomington-Normal Seating Company approximated $1.7 million and $1.8 million at December 31, 1993 and 1992, respectively. Identifiable assets are those assets used in, or resulting from, the operation of a segment. Corporate assets, principally cash and cash equivalents, administrative offices and other assets, are not classified as identifiable assets. (7) Pension Benefits The Company has non-contributory pension plans covering substantially all of its salaried and hourly employees. The benefits are based on either years of service and the employee's compensation during the last five years of employment, or a fixed-dollar rate for each year of credited service up to a maximum of thirty years. The Company's policy is to fund pension costs accrued. The following table sets forth the funded status of the plans and amounts recognized in the Company's consolidated balance sheets:
1993 1992 Actuarial present value of: Vested benefits $30,072,000 $23,785,000 Accumulated benefits 31,338,000 25,241,000 Projected benefits 37,378,000 31,190,000 Plan assets at fair market value 42,471,000 43,946,000 Plan assets in excess of projected benefits 5,093,000 12,756,000 Unamortized transition assets (2,963,000) (3,298,000) Unamortized prior service cost 1,673,000 1,512,000 Unrecognized net gain (4,971,000) (11,720,000) Accrued pension cost included in consolidated balance sheets $ 1,168,000 $ 750,000
Assets in the plans consist mainly of investments in common stocks, private sector bonds and federal government obligations. The components of net pension cost are as follows:
1993 1992 1991 Service $ 2,033,000 $ 1,836,000 $ 1,648,000 Interest cost 2,469,000 2,212,000 1,942,000 Actual return on assets 300,000 (8,388,000) (8,542,000) Net amortization and deferral (4,384,000) 5,190,000 6,123,000 Net pension cost $ 418,000 $ 850,000 $ 1,171,000
The weighted average discount rate and rate of increase in future compensation levels used in determining the actuarial present value of the projected benefit obligation at December 31, 1993, were 7.25% and 4%, respectively (8% and 5%, respectively for the previous two years presented). The expected long-term rate of return on assets was 8%. (8) Other Postretirement Benefits In addition to providing pension benefits, the Company sponsors two postretirement benefit plans that cover salaried employees and their dependents. One plan provides medical benefits and the other plan provides life insurance benefits. The postretirement medical plan is contributory until the retiree turns age 65 or if the retiree is at least age 62 and retired with 15 or more years of service. The accounting for this plan is consistent with the Company's expressed intent to modify its future contribution policy such that the Company's contributions will be capped at three times the 1993 cost levels. The life insurance plan provides death benefits that vary depending on salary at retirement. The Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," as of January 1, 1993. The effect of adopting Statement 106 on net earnings for the year ended December 31, 1993 was a decrease of approximately $4,040,000, which includes an increase in the pre-tax net periodic postretirement benefit cost of approximately $559,000. Postretirement benefit costs were less than $200,000 for the years ended December 31, 1992 and 1991, which were recorded on a cash basis and have not been restated. The following table presents the funded status of these obligations reconciled with amounts recognized in the Company's consolidated balance sheet at December 31, 1993: Page 25 Accumulated postretirement benefit obligation: Retirees $ 3,492,000 Fully eligible active salaried employees 1,364,000 Other active employees 4,399,000 9,255,000 Assets at fair value, primarily insurance contracts 921,000 Accumulated postretirement benefit obligation in excess of assets 8,334,000 Unrecognized net loss (1,813,000) Accrued postretirement benefit cost included in the consolidated balance sheet $ 6,521,000 Net periodic postretirement benefit cost for the year ended December 31, 1993 included the following components: Service cost $ 341,000 Interest cost 572,000 Actual return on assets (59,000) Net periodic postretirement benefit cost $ 854,000
For measurement purposes, the annual percent rate of increase in the per capita cost of health care benefits (i.e. health care cost trend rate) for 1993 was assumed to vary by age category and by type of health care service. For benefits provided to participants under age 65, the 1993 trend was assumed to be 15% for prescriptions drugs and 14% for all other costs. The over age 65 trends for 1993 were assumed to be 15% for prescriptions drugs, 11.5% for charges related to Medicare Part B expenses and 6.0% for Medicare Part A charges. These rates were assumed to decrease gradually to 6 percent (5.5% for Medicare Part A charges) over the next 15 years and remain at that level thereafter. The health care cost trend rate assumption has a significant effect on the amounts reported. For example, increasing the assumed health care cost trend rates by one percentage point in each year would increase the accumulated postretirement benefit obligation as of December 31, 1993 by 1.8 percent and the aggregate of the service and interest cost components of net periodic postretirement benefit cost for the year ended December 31, 1993 by 1.4 percent. The weighted average discount rate and rate of increase in future compensation levels used in determining the accumulated postretirement benefit obligation were 7.25 % and 4%, respectively at December 31, 1993. The expected long-term rate of return on assets was 8%. Beginning in 1994, the unrecognized net loss will be amortized over the average remaining service period of active plan participants (21 years). (9) Provision for Plant Closings During the fourth quarter of 1993, the Company accrued $15.0 million in connection with management's decision to close four automotive plants. This resulted in an after tax charge of $9.6 million or $2.28 per share. The provision consists principally of the devaluation of building and equipment ($5.0 million) to estimated realizable value, employee severance and benefit costs ($3.0 million), site restoration and other environmental exit costs ($2.6 million) and other facilities consolidation costs ($4.4 million). A substantial portion of these costs are expected to be funded in 1994, with the remainder by 1996. (10) Environmental Matters The Company is involved in proceedings related to environmental matters. As of December 31, 1993, the Company has recorded a $3.1 million liability for estimated future clean-up costs in connection with its internal site assessment and compliance program (which includes $2.6 million included in the provision for plant closings accrual discussed in note 9). The Company believes this accrual is adequate for environmental matters known at the current time. Changes in EPA standards, improvements in clean-up technology and discovery of additional information concerning these sites and other sites could result in future expenses that are greater than the accrued liability. Management believes that these matters will not have a material adverse effect upon its future financial position or results of operations. (11) Stock Option Plans Under the Company's 1990 Stock Option Plan, 225,000 shares (as adjusted for the 1992 stock split) of the Company's common stock have been reserved for grants to officers and key employees at prices which are not less than the fair market value on the date of the grant. Stock options outstanding of 7,875 at December 31, 1993 for the 1982 Incentive Stock Option Plan are exercisable at an option price of $17.50 per share. This Plan expired in February, 1992 and accordingly no additional options are available for grant. Stock options outstanding of 58,300 at December 31, 1993 under the 1990 Plan are exercisable at a weighted option price of $15.36 per share. Options granted, but not exercised, expire within five years from the date of the grant. Transactions for the years ended December 31, 1993, 1992 and 1991 were as follows:
Number of Shares --------------------------------- 1993 1992 1991 ------- -------- ------- Outstanding at beginning of year 100,075 133,575 137,025 Granted --- 83,575 750 Exercised (32,275) (116,025) (750) Canceled (1,625) (1,050) (3,450) Outstanding at end of year 66,175 100,075 133,575 Available for grant at end of year 78,550 78,050 160,875
Page 26 Independent Auditors' Report To the Shareholders and Board of Directors of Douglas & Lomason Company: We have audited the accompanying consolidated balance sheets of Douglas & Lomason Company and subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of earnings, shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 1993. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Douglas & Lomason Company and subsidiaries at December 31, 1993 and 1992, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1993 in conformity with generally accepted accounting principles. As discussed in note 1 to the consolidated financial statements, the Company changed its method of accounting for income taxes in 1993 to adopt the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." As discussed in notes 1 and 8 to the consolidated financial statements, the Company also adopted the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" in 1993. /s/ KPMG Peat Marwick Detroit, Michigan January 31, 1994
Quarterly Financial Summary (In thousands of dollars except as to per share data; unaudited) First Second Third Fourth 1993 Quarter Quarter Quarter Quarter Total Net sales $115,403 $103,859 $92,995 $112,586 $424,843 Gross profit 12,412 8,295 2,367 7,834 30,908 Earnings (loss) before income taxes and cumulative effect of change in accounting principle 6,792 2,855 (3,038) (12,627) (6,018) Net earnings (loss) 605 1,850 (1,763) (7,860) (7,168) Earnings (loss) per share before cumulative effect of change in accounting principle 1.04 .44 (.42) (1.86) (.80) Net earnings (loss) per share .14 .44 (.42) (1.86) (1.70) First Second Third Fourth 1992 Quarter Quarter Quarter Quarter Total Net sales $90,815 $98,992 $90,826 $110,545 $391,178 Gross profit 7,141 9,679 6,952 9,215 32,987 Earnings before income taxes 1,748 4,610 2,555 3,680 12,593 Net earnings 1,043 3,030 1,660 3,037 8,770 Net earnings per share .33 .77 .40 .72 2.25
Fourth quarter net earnings in 1993 were negatively impacted by the provision for plant closings of $2.28 per share. Fourth quarter net earnings in 1992 were negatively impacted by costs associated with the start-up of a new facility in Mexico and the costs accrued related to the expected downsizing of a plant in 1993. These costs in 1992 were offset by the favorable tax benefit realized from recording research and development tax credits. The net effect of fourth quarter adjustments in 1992 was a decrease of $.14 per share. Page 27 SHAREHOLDER INFORMATION Annual Meeting The Annual Meeting of Shareholders will be held on Friday, April 29, 1994, at 11:00 a.m. CDT at the New World Inn, 265 33rd Avenue, Columbus, NE. All shareholders are cordially invited to attend. Stock Market Information Douglas & Lomason Company common stock is traded in the National Market System of The Nasdaq Stock Market under the symbol DOUG. Stock price quotations are printed daily in major newspapers. As of December 31, 1993, there were 4,227,220 shares of common stock outstanding, of which approximately 15% was owned by officers and directors and 43% by institutions. At that date, there were 806 shareholders of record. Also at that date, the following securities firms were registered as market makers of the Company's common stock: Bear, Stearns & Co. Inc. Neuberger & Berman First of Michigan Corporation Sherwood Securities Corp. Herzog, Heine, Geduld, Inc. Stifel Nicolaus & Co. Kemper Securities, Inc. Troster Singer Corp. Stock Prices and Cash Dividends
1993 ---------------------------- Market Price ---------------- Cash Quarter High Low Dividend - ------- ------ ------ -------- First 29 22 1/4 $ .10 Second 29 22 1/2 .10 Third 27 1/2 16 3/4 .10 Fourth 20 16 .10 ------ $ .40 1992 ---------------------------- Market Price ---------------- Cash Quarter High Low Dividend - ------- ------ ------ -------- First 31 11 5/8 $ -- Second 35 17 1/2 .10 Third 21 15 .10 Fourth 23 14 .10 ------ $ .30
The Company has paid a cash dividend each year since 1957. Form 10-K and Other Financial Publications The Form 10-K for the year ended December 31, 1993, as well as other financial publications of the Company, may be obtained without charge. Requests should be directed to Patricia L. Shelton, Assistant Vice President and Assistant Secretary, at the corporate offices. Investor Relations Contact Shareholders and prospective investors may contact the Company with questions or requests for additional information. Inquiries should be directed to James J. Hoey, Senior Vice President and Chief Financial Officer, at the corporate offices. Transfer Agent and Registrar NBD Bank, N.A., Detroit, MI. To write or telephone, contact: Securities Transfer Services P.O. Box 8204 Boston, MA 02266 (800)257-1770 Independent Auditors KPMG Peat Marwick, Detroit, MI Legal Counsel Dickinson, Wright, Moon, Van Dusen & Freeman, Detroit, MI Smith, Currie & Hancock, Atlanta, GA Page 29 EX-24 5 PEAT MARWICK CONSENT The Board of Directors and Shareholders Douglas & Lomason Company: We consent to incorporation by reference in the Registration Statement No. 33-36359 on Form S-8 of Douglas & Lomason Company of our report dated January 31, 1994, relating to the consolidated balance sheets of Douglas & Lomason Company and subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of earnings, shareholders' equity, and cash flows and related schedules for each of the years in the three-year period ended December 31, 1993, which report appears in the December 31, 1993, annual report on Form 10-K of Douglas & Lomason Company. Our report refers to the changes in accounting for income taxes and postretirement benefits other than pensions in 1993. /s/ KPMG Peat Marwick Detroit, Michigan March 25, 1994 -----END PRIVACY-ENHANCED MESSAGE-----