-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PCncYRde28vQHJXgrI6CWGa8ZI5pKVQqVRsAjSvYv8qzAMYnbzLy0qUnQozYmw12 mC6+K6m80q+qn7NAu6UV1g== 0000950009-95-000403.txt : 19951119 0000950009-95-000403.hdr.sgml : 19951119 ACCESSION NUMBER: 0000950009-95-000403 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DOUGLAS & LOMASON CO CENTRAL INDEX KEY: 0000029854 STANDARD INDUSTRIAL CLASSIFICATION: PUBLIC BUILDING AND RELATED FURNITURE [2531] IRS NUMBER: 380495110 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-00627 FILM NUMBER: 95592089 BUSINESS ADDRESS: STREET 1: 24600 HALLWOOD CT CITY: FARMINGTON HILLS STATE: MI ZIP: 48335 BUSINESS PHONE: 3134787800 10-Q 1 D&L 3RD QTR FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. FORM 10-Q (X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarter ended September 30, 1995 ( ) 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 (I.R.S. Employer incorporation or organization) Identification No.) 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 Former name, former address and former fiscal year, if changed since last year: same Indicate by checkmark 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 and (2) has been subject to such filing requirements for the past 90 days. YES __X__ NO _____ CLASS OUTSTANDING AT NOVEMBER 14, 1995 Common stock, $2 par value 4,243,021
DOUGLAS & LOMASON COMPANY Consolidated Condensed Balance Sheets September 30 December 31 1995 1994 ------------- ----------- ASSETS Current assets: Notes and accounts receivable $117,341,850 $ 99,927,502 Inventories Raw materials 12,407,110 10,823,892 Work in process and finished goods 17,096,121 8,967,433 ------------ ------------ 29,503,231 19,791,325 Cash and other current assets 5,975,263 10,185,455 ------------ ------------ 152,820,344 129,904,282 Property, plant and equipment, net 75,742,271 66,787,613 Other non-current assets 18,218,699 14,871,532 Intangibles 38,986,836 -- ------------ ------------ Total assets $285,768,150 $211,563,427 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $ 5,076,579 $ 5,938,130 Accounts payable and accrued expenses 85,294,152 71,787,370 Taxes on income -- 1,865,401 ------------ ------------ Total current liabilities 90,370,731 79,590,901 Postretirement benefits other than pensions 8,272,413 7,533,669 Other liabilities 17,981,733 6,822,429 Long-term debt, less current maturities 83,206,250 31,887,500 Shareholders' equity Preferred stock No par value, authorized 500,000 shares, issued - none Common stock Par value $2 per share authorized 10,000,000 shares; issued and outstanding 4,243,021 shares in 1995 and 4,228,720 shares in 1994 8,486,042 8,457,440 Other capital 28,087,684 27,997,976 Retained earnings 53,324,345 52,048,512 Foreign currency translation adjustment (3,961,048) (2,775,000) ----------- ------------ Total shareholders' equity 85,937,023 85,728,928 ------------ ------------ Total liabilities and shareholders' equity $285,768,150 $211,563,427 ============ ============
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DOUGLAS & LOMASON COMPANY Consolidated Condensed Statements of Income Three Months Ended Nine Months Ended September 30 September 30 ---------------------------- ---------------------------- 1995 1994 1995 1994 ------------ ------------ ------------ ------------ Net sales $131,264,203 $137,679,747 $416,924,263 $384,399,109 Cost of sales 124,504,973 132,025,549 393,395,157 357,918,334 ------------ ------------ ------------ ------------ Gross profit 6,759,230 5,654,198 23,529,106 26,480,775 Selling, general and administrative expense 6,774,730 4,855,197 18,796,817 15,732,107 ------------ ------------ ------------ ------------ Operating income (loss) (15,500) 799,001 4,732,289 10,748,668 Other income (expenses): Interest expense, net (1,725,365) (669,656) (3,475,042) (1,877,543) Interest income and other 75,373 319,407 337,292 778,731 ------------ ------------ ------------ ------------ (1,649,992) (350,249) (3,137,750) (1,098,812) Earnings (loss) before provisions for income taxes (1,665,492) 448,752 1,594,539 9,649,856 Income tax expenses (benefit) (865,000) 215,000 (530,000) 3,590,000 ------------ ------------ ------------ ------------ Net earnings (loss) $ (800,492) $ 233,752 $ 2,124,539 $ 6,059,856 ============ ============ ============ ============ Net earnings (loss) per share $ (.19) $ .05 $ .50 $ 1.43 ============ ============ ============ ============ Weighted average number of shares 4,243,051 4,228,035 4,240,607 4,227,918 ============ ============ ============ ============
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DOUGLAS & LOMASON COMPANY Consolidated Condensed Statements of Cash Flows Nine Months Ended September 30 --------------------------------- 1995 1994 ------------ ------------ Cash flows from operating activities: Net earnings $ 2,124,539 $ 6,059,856 Depreciation 9,760,078 9,764,036 Postretirement benefits other than pensions -- Changes in operating assets and liabilities: Increase in accounts receivable (15,745,221) (32,245,366) Increase in inventories (229,931) (10,768,814) Increase in prepaid expenses and other assets (5,113,673) (499,177) Increase in income taxes recoverable (530,000) -- Increase in accounts payable, and accrued expenses 13,483,210 31,938,047 Increase (decrease) in other liabilities (695,492) 1,155,053 ------------ ------------- Net cash provided by operating activities 3,053,510 5,403,635 ------------ ------------- Cash flows from investing activities: Proceeds from the sale of property, plant and equipment 83,811 211,100 Acquisitions of property, plant and equipment (13,542,312) (11,833,065) Cost of acquisition, net of cash (43,487,920) -- ------------ ------------ Net cash used by investing activities (56,946,421) (11,621,965) ------------ ------------ Cash flows from financing activities: Proceeds from long-term debt 55,000,000 17,000,000 Repayment of long-term debt (6,293,469) (4,571,015) Proceeds from (repayment of) short-term debt -- (7,000,000) Proceeds from exercised stock options, net 118,310 14,500 Dividends paid (848,670) (1,268,391) ------------ ------------ Net cash provided by financing activities 47,976,171 4,175,094 ------------ ------------ Effect of translation on cash (39,878) -- Net decrease in cash (5,956,618) (2,043,236) Cash at beginning of year 6,532,415 2,745,818 ------------ ------------ Cash at end of quarter $ 575,797 $ 702,582 ============ ============
4 DOUGLAS & LOMASON COMPANY Notes to Consolidated Condensed Financial Statements 1. In the opinion of the Douglas & Lomason Company (the "Company"), the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position as of September 30, 1995 and 1994, and the results of operations for the nine months then ended, and changes in financial position for the nine months then ended, subject to year end audit adjustments. 2. On June 8, 1995, the Company acquired the stock of Bestop, Inc. ("Bestop"). Bestop is the leading designer and manufacturer in North America of soft tops and accessories for small sport utility vehicles. Bestop sells its products domestically and internationally to original equipment manufacturing (OEM) companies and in the aftermarket. The purchase agreement required a purchase price of approximately $43,952,000. The acquisition has been accounted for in accordance with the purchase method of accounting. Had the acquisition of Bestop, Inc. occurred as of January 1, 1994, revenues, net income and earnings per share would have been as follows:
Three Months Ended Nine Months Ended September 30 September 30 -------------------- -------------------- (in 000's except for per share data) 1995 1994 1995 1994 -------- -------- -------- -------- Revenues $131,264 $151,046 $445,289 $422,941 Net Earnings $ (800) $ 127 $ 2,155 $ 5,702 Net Earnings Per Share $ (.19) $ .03 $ .51 $ 1.35
3. During the fourth quarter of 1993, the Company recorded a charge of $15.0 million in connection with management's decision to close certain automotive plants. This resulted in an after tax charge of $9.6 million or $2.28 per share. $5.0 million of this charge was immediately utilized for the devaluation of building and equipment. During 1994, $1,650,000 was charged to facility maintenance costs and the payment of employee severance and benefit costs. These severance payments represented the majority of the 12% expected workforce reduction. In addition, $1.2 million of employee severance and benefit costs and $650,000 of facilities, maintenance and other costs were taken into income during the third and fourth quarters of 1994, respectively. Furthermore, in compliance with current guidance, site restoration and other environmental exit costs of $2.5 million were reclassified from the provision for plant closing accrual to other accrued liabilities during the fourth quarter of 1994. During the nine months ended September 30, 5 1995, approximately $1.7 million was charged against the accrual for facility maintenance and employee benefit costs. The cash outflows for the remaining accrued liability are expected to occur over the next two years. Selected financial information for these closed automotive facilities for the years ended December 31 are as follows:
1994 1993 1992 ----------- ------------ ----------- Sales $34,798,664 $ 71,754,231 $84,256,465 Pre-tax earnings (loss) $ 359,027 $(15,597,071) $(1,902,175)
6 Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources At September 30, 1995, the Company had working capital of $62.5 million and available borrowings of $14.0 million on a $60.0 million revolver credit agreement with two banks. The current ratio was 1.7 to 1.0. The principal increases in the accounts receivable, inventories and accounts payable balance sheet amounts are due to the acquisition and consolidation of Bestop, Inc. acquired in June 1995. Funds from operations of $3.1 million and proceeds from borrowing in 1995 of $55.0 million and the $6.5 million cash on hand at the beginning of the year were the principal sources of cash in the first nine months of 1995. The acquisition of Bestop, Inc. in June, 1995 for $43.5 million, capital expenditures of $13.2 million, debt repayment of $6.3 million, pension obligation of $1.0 million and dividends of $.8 million were the primary uses of cash. The Company is in the final stages of forming a joint venture in a foreign country to further it's global opportunities. This will require a capital contribution of approximately $5.0 million, which will be primarily funded by an anticipated dividend from an investment in an affiliated company. No other significant borrowings are anticipated. Plant Closings The three plants included in the fourth quarter 1993 plant closing plan discontinued operations and terminated substantially all employees during the year of 1994. Sale of certain property, plant and equipment remains to be completed. The cash outflows for the remaining accrued liability are expected to occur over the next two years. Results of Operations Net Sales Net sales for the three months ended September 30, 1995 of $131.3 million have decreased $6.4 million from the three month sales of $137.7 for the period ended September 30, 1994. This decrease of 4.7% is primarily attributable to the decrease in volume for the Ford Aerostar, Ford Contour and Mercury Mystique, for which the Company supplies fully trimmed seat sets, and General Motor's decision to phase out the Chevrolet Caprice and Buick Roadmaster. Also, the changeover of the Chrysler minivan resulted in some sales reduction. Net sales for the nine month period ended September 30, 1995 of $416.9 million increased $32.5 million or 8.5% over the same period in 1994. The principal increase is due to the consolidation of the sales of the Company's recently acquired subsidiary, Bestop, Inc. as well as the effect of a full nine months sales in 1995 for the Contour and Mystique in Mexico which began in August 1994. Cost of Sales Cost of sales as a percentage of sales decreased to 94.8% for the three month period ended September 30, 1995 compared to 95.9% in the same period in 1994. The Company has realized an increase in the equity earnings of an investment which has reduced cost of sales consistent with previous years' presentations. The effect of this reduction is less than 1% of sales in both the three month and nine month figures. The trend of raw material price increases and reduced selling prices to our customers as a result of long term agreements prevalent in the automotive 7 industry had and will continue to have an adverse effect on the relationship of cost of sales to sales. Opportunities for cost reduction will improve this trend. Selling, General and Administrative Expenses Selling, general and administrative expenses for the three month period ended September 30, 1995 of $6.8 million increased $1.9 million from the $4.9 million reported for the same three month period of 1994. The Bestop consolidation accounts for $1.7 million of this increase. The selling, general and administrative expenses for the nine month period ended September 30, 1995 of $18.8 million increased $3.1 million from the $15.7 million reported for the nine month period ended September 30, 1994. Again, this increase is principally attributable to the consolidation of Bestop, Inc. Other factors of the increase reflect higher salaries and increased employment costs. Interest Expense Interest expense in the third quarter of 1995 of $1.7 million increased $1.0 million from the same quarter in 1994. Higher debt levels in 1995 of approximately $51.0 million primarily related to the Bestop acquisition and capital expenditures is the principal explanation for the increase in interest expense. Net Earnings (Loss) Net loss of $800,000 or $.19/share in the third quarter of 1995 compares unfavorably with the net earnings of $234,000 or $.05/share for the third quarter of 1994. Sales in July, 1995 and 1994 were substantially lower than normal levels as a result of customer shutdowns for vacations and changeovers. The impact of the reduced sales level in July results in substantial losses that have not been recovered in August and September. The net earnings in 1994 included a reduction of $1.2 million (pretax) to the provision for plant closings recorded in 1993. The adjustment reflected lower than expected costs related to the fourth quarter 1993 plant closing plan. Net earnings for the nine months ended September 30, 1995 of $2.1 million or $.50/share decreased $4.0 million from the $6.1 million or $1.43/share reported for the same period in 1994. Net earnings for the nine month period in 1995 have been negatively impacted by the rising cost of raw materials and selling price reductions included in long term agreements which are prevalent in the automotive industry. Opportunities for cost reductions through engineering changes will improve this trend in the future. 8 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. None. (b) Reports on Form 8-K. The Registrant filed no reports on Form 8-K during the quarter for which this report is filed. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DOUGLAS & LOMASON COMPANY ------------------------- (Registrant) Date: November 14, 1995 /s/ James J. Hoey ------------------------- Senior Vice President & Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer) 9 EX-27 2 ART. 5 FDS FOR 3RD QUARTER 10-Q
5 1,000 9-MOS DEC-31-1995 SEP-30-1995 $ 576 0 117,342 0 29,503 152,820 168,474 92,732 285,768 90,371 88,283 8,486 0 0 28,088 285,768 416,924 416,924 393,395 393,395 18,797 0 3,475 1,595 530 2,125 0 0 0 2,125 .50 0
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