-----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, KQce48rdWIaQ3XwZGtqVA7kNUYK3LQri0uaL2DU8b6xVR65+m12QC3RCi09xJBvp ms7mQdEv0HSVEtioCELLKQ== 0000950009-96-000161.txt : 19960329 0000950009-96-000161.hdr.sgml : 19960329 ACCESSION NUMBER: 0000950009-96-000161 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960328 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-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 000-00627 FILM NUMBER: 96539893 BUSINESS ADDRESS: STREET 1: 24600 HALLWOOD CT CITY: FARMINGTON HILLS STATE: MI ZIP: 48335 BUSINESS PHONE: 3134787800 10-K405 1 FORM 10-K, ITEM 405 CHECKED ============================================================================== 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, 1995, 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 12, 1996, 4,243,021 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 $45,110,362. 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, 1995. Part II: Items 5-8--Part of Annual Report of the Registrant for the year ended December 31, 1995. Part III: Items 10-12--Part of definitive Proxy Statement of the Registrant dated March 27, 1996 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 94% of the Company's total sales during each of the last three years, include fully trimmed seating, seat frame assemblies and mechanisms, soft tops and accessories and decorative moldings. 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 6% of the Company's total sales during each of the last three years. The Registrant classifies its business into two segments: automotive products and other segments. A summary of certain segment information appears in note (8) of notes to consolidated financial statements on page 22 of the 1995 Annual Report to Shareholders and is incorporated herein by reference. AUTOMOTIVE PRODUCTS Automotive product sales are comprised 85.0% of fully trimmed seating, seat frame assemblies and mechanisms, 6.0% of soft tops and accessories and 9.0% of decorative moldings. Seating The Company is one of the 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 and vans. The Company's seat frame business has grown significantly over the 49 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. Seating Joint Ventures In 1988, the Company formed a 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. The Company believes that opportunities for growth are emerging in foreign transplant operations in North America and from the expanding trend toward seat assembly outsourcing in Europe and the Far East. In 1995, the Company entered into a joint venture agreement with Shanghai Traffic Machinery Factory to manufacture seat frames and metal stampings in Shanghai, P.R. China. Current production at the joint venture, Shanghai Lomason Automotive Seating Systems Company Limited, is for the Shanghai Volkswagen Santana series. The Company announced in February 1996 that it entered into a 50/50 joint venture with Keiper Recaro Enterprises, Inc. to form Euro American Seating. The joint venture has been awarded a contract to supply General Motors, North American Operations, with complete JIT seating systems. The joint venture will also pursue supplying JIT seat systems on a global scale. Soft Tops and Accessories In June 1995, the Company acquired Bestop, Inc. ("Bestop"), the leading designer and manufacturer in North America of soft tops and accessories for small sport utility vehicles. Bestop also designs and manufactures soft tops and accessories for larger sport utility vehicles. Bestop sells its products domestically and internationally to original equipment manufacturer companies and in the aftermarket. Bestop estimates that it holds more than half of the market share in North America for soft tops of small sport utility vehicles. Decorative Moldings The Company, which has been supplying decorative moldings to the automotive industry since 1903, has announced its intention to discontinue the operations of this component of its business in 1996. These products include body side and wheel opening moldings, head and tail lamp bezels and window and door sealing systems. The Company does not anticipate a significant loss on the ultimate disposal of the assets related to this component. Product Engineering The Company is continually seeking to improve existing automotive products and pursuing new automotive products and processes through a 165 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. Research and development costs incurred by the Company during the last three years were not considered material. Sales and Customers Sales coverage by the Company of the North American automotive industry is maintained by an experienced direct sales staff consisting of 16 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 automotive products to the three major automotive manufacturers and others during the past three years is as follows:
1993 1994 1995 ---- ---- ---- Chrysler Corporation................. 51% 39% 25% Ford Motor Company................... 25 40 48 General Motors Corporation........... 15 14 12 All other............................ 9 7 15
Sales percentages include sales to other Tier One suppliers for ultimate sale to the above customers. - 2 - OTHER SEGMENTS Other segments of the Company's business accounted for approximately 6% of total Company sales in each of the three years ended December 31, 1995. Industrial and Commercial Products The Company is a major supplier to conveyor manufacturers of pulleys and rollers. The Company also manufacturers conveyors, bag filling scales and automatic palletizers. These products are sold to the agriculture, mining and transportation industries among others. 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, steel, aluminum or reinforced fiberglass refrigerated truck bodies and trailers. The Company intends to dispose of this business during 1996. 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 Corporation. The Company also competes with Delphi Interior and Lighting Systems of General Motors Corporation, a captive seating supplier. 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 approximate number of associates employed by the Registrant at December 31, 1995 was 5,900. 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 three buildings containing approximately 96,000 square feet. Information as to the Company's 18 principal facilities in operation as of December 31, 1995 is set forth below: - 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 Ciudad Acuna, Mexico................. 134,100 1987 Owned Excelsior Springs, Missouri.......... 87,500 1993 Leased Troy, Missouri....................... 82,500 1990 Leased Orangeville, Ontario, Canada.(1)..... 28,300 1992 Leased Del Rio, Texas.(1)................... 40,000 1987 Leased Saltillo, Mexico..................... 44,000 1992 Owned Body Trim Components Carrollton, Georgia................. 240,700 1955 Owned 48,900 1979 Owned LaGrange, Georgia................... 85,900 1988 Leased INDUSTRIAL AND COMMERCIAL Material Handling Equipment Humboldt, Iowa....................... 95,600 1968 Owned Dakota City, Iowa.................... 91,600 1978 Owned Fairfield, CA.(1).................... 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) A distribution facility.
The Company believes that substantially all of its property and equipment is in good condition and adequate for its present requirements. The Registrant currently has excessive production capacity as a result of discontinued models. The Registrant's current utilization is approximately 70% of capacity. 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 - 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 61 James B. Nicholson Vice Chairman of the Board 1990 52 James J. Hoey Senior Vice President and 1992 Chief Financial Officer 1985 59 Roger H. Morelli Senior Vice President- 1987 51 Manufacturing Steven C. Bruck Vice President-Design, Development and Engineering Services 1994 39 Ollie V. Cheatham Vice President-Human Resources 1984 51 A. Warren Vice President-Safety, Daubenspeck III Environmental and Loss Control 1988 44 Martin A. DiLoreto Vice President-Procurement and International Business Development 1994 60 Scott E. Paradise Vice President-Automotive Sales 1993 41 Robert D. Strachura Vice President and Executive Manager- Manufacturing 1990 53 Dan D. Smith Vice President-Cost Analysis and Information Technology 1989 47 Gary A. Pniewski Vice President-Seating and Decorative Trim Engineering 1994 51 Verne C. Hampton II Secretary 1977 62 Melynn M. Zylka Treasurer 1990 35
- 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. Bruck who joined the Company in 1993 after having served as Vice President, Product Engineering Group at RCO the preceding five years; 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; and Mr. Hampton who has been a partner with the law firm of Dickinson, Wright, Moon, Van Dusen and Freeman for more than five years. 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 captions "Stock Prices and Cash Dividends" and "Shareholder Information" on pages 27 and 28 of the 1995 Annual Report of the Registrant is incorporated by reference herein. As of December 31, 1995, there were 726 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 pages 26 and 27 the 1995 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 12 and 13 of the 1995 Annual Report of the Registrant is incorporated by reference herein. Item 8. Financial Statements and Supplementary Data The information set forth on pages 14 through 25 of the 1995 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. PART III Item 10. Director 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 27, 1996 filed with the Securities and Exchange Commission pursuant to Regulation 14A is incorporated by reference herein for information as to directors of the Registrant. - 6 - 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 captions "Compensation Committee Report" and "Executive Compensation" on pages 4 through 7 of the definitive Proxy Statement of the Registrant dated March 27, 1996 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 27, 1996 filed with the Securities and Exchange Commission pursuant to Regulation 14A is incorporated by reference herein. Item 13. Certain Relationships and Related Transactions Not applicable. 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 1995 Annual Report to its Shareholders for the year ended December 31, 1995, are incorporated herein by reference: Consolidated Balance Sheets at December 31, 1995 and 1994. Consolidated Statements of Earnings for each of the years in the three year period ended December 31, 1995. Consolidated Statements of Shareholders' Equity for each of the years in the three year period ended December 31, 1995. Consolidated Statements of Cash Flows for each of the years in the three year period ended December 31, 1995. Notes to Consolidated Financial Statements. The Independent Auditors' Report and Schedule VIII -- Valuation and Qualifying Accounts for the years ended December 31, 1995, 1994 and 1993 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; the Exhibits marked with five asterisks were - 7 - filed as Exhibits to the Form 10-K Report of the Registrant for the fiscal year ended December 31, 1993, the Exhibit marked with six asterisks was filed as an Exhibit to the Form 8-K Report of the Registrant dated June 8, 1995, and the Exhibit marked with seven asterisks was filed as an Exhibit to the Form 10-Q Report of the Registrant for the quarter ended June 30, 1995, and are incorporated herein by reference, the Exhibit numbers in brackets being those in such Form 10-K, 10-Q or 8-K Reports). (3)(a)***** Restated Articles of Incorporation of Registrant. [(3) (a)] (3)(b)***** By-Laws of the Registrant. [(3) (b)] (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 Manu- facturers Bank, N.A., as amended. [(4)(b)] (4)(c)****** Amended and Restated Credit Agreement dated as of June 8, 1995, between Registrant and the banks named in Section 2.1 thereof. [2] (10)(a)* 1982 Incentive Stock Option Plan of the Regis- trant [10](#) (10)(b)*** 1990 Stock Option Plan of Registrant [(10)(c)](#) (10)(c)**** Joint Venture Agreement dated as of July 25, 1986 between Registrant and Namba Press Works Co. Ltd. [(10)(c)]. (10)(d)******* Directors Stock Plan [1](#) (13) Portions of 1995 Annual Report of Regis- trant. (21) Subsidiaries of the Registrant. (23) Consent of KPMG Peat Marwick LLP. (27) Financial Data Schedule (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. (#) This document is a management contract or compensatory plan. - 8 - SIGNATURES Pursuant to the requirements of 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 27th day of March 1996. DOUGLAS & LOMASON COMPANY By: /s/ H. A. Lomason II ------------------------- H. A. Lomason II Chairman of the Board and President (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 27, 1996. Signature Title --------- ----- /s/ James E. George Director - ----------------------- James E. George /s/ Verne C. Hampton II Director - ----------------------- Verne C. Hampton II /s/ H. A. Lomason II Director - ----------------------- H. A. Lomason II /s/ Dale A. Johnson Director - ----------------------- Director - ----------------------- Charles R. Moon /s/ James B. Nicholson Director - ----------------------- /s/ Gary T. Walther Director - ----------------------- - 9 - 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, 1995 and 1994, 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, 1995 together with the related notes and the report of KPMG Peat Marwick LLP, independent certified public accountants, all contained in the Company's 1995 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 1995 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 VIII - Valuation and Qualifying Accounts F-3 F-1 [Letterhead of KPMG Peat Marwick LLP] KPMG Peat Marwick LLP Suite 1200 150 West Jefferson Detroit, MI 48226-4429 Independent Auditors' Report The Board of Directors and Shareholders Douglas & Lomason Company: Under date of January 29, 1996, we reported on the consolidated balance sheets of Douglas & Lomason Company and subsidiaries as of December 31, 1995 and 1994, 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, 1995, as contained in the 1995 annual report to shareholders. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the year 1995. In connection with our audits of the aforementioned consolidated financial statements, we also have audited the related consolidated financial statement schedules as listed in the accompanying index. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement schedule based on our audits. In our opinion, such financial statement schedule, 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, 7, and 10 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 LLP Detroit, Michigan January 29, 1996 Member Firm of Klynvald Peat Marwick Goerdeler F-2 Schedule VIII
DOUGLAS & LOMASON COMPANY AND SUBSIDIARIES Valuation and Qualifying Accounts Years ended December 31, 1995, 1994, and 1993 (Expressed in thousands of dollars) 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 == ===== == ===== Balance at Charged to Balance at December 31, Costs and December 31, 1993 Expenses Deductions 1994 ---- -------- ---------- ---- Other accrued plant closing liabilities 9,078 -- 5,397 3,681 ===== == ===== ===== Balance at Charged to Balance at December 31, Costs and December 31, 1994 Expenses Deductions 1995 ---- -------- ---------- ---- Other accrued plant closing liabilities 3,681 -- 2,947 734 ===== == ===== =====
F-3 EX-13 2 REQUIRED INFORMATION FROM THE 1995 ANNUAL REPORT Exhibit 13 MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES At December 31, 1995, the Company had working capital of $46.1 million and available borrowings of $27.0 million on a $60.0 million revolver credit agreement with two banks. The current ratio was 1.5 to 1.0. The principal increases in total assets and liabilities at December 31, 1995, as compared to December 31, 1994, are due to the acquisition and consolidation of Bestop, Inc. acquired in June, 1995. During 1995, the Company formed a joint venture in China with Shanghai Traffic Machinery Factory for the purpose of furthering global opportunities. An initial capital contribution by the Company of approximately $5.0 million was required by the joint venture agreement. This joint venture will provide seat frames and stampings for the Shanghai Volkswagen Santana series. Consistent with the Company's desire for a strong global presence, other overseas investments and relationships are being examined to supplement the Company's core business. Earnings from operations of $4.2 million, dividends of $4.4 million and proceeds from borrowings of $42.0 million were the principal sources of cash in 1995. The acquisition of Bestop, Inc. in June, 1995 for $43.5 million, capital expenditures of $18.4 million and debt repayments of $7.7 million were the primary uses of cash. No other significant borrowings are anticipated on a short-term or long-term basis beyond the capacity of the Company's present revolver loan. Capital expenditures in 1996 are anticipated to be approximately $15.0 million. Refer to Note 11 for complete information on plant closings. RESULTS OF OPERATIONS - 1995 VERSUS 1994 Net Sales Net sales of $561.2 million in 1995 were the second highest in the Company's history but decreased slightly from the $566.8 million of net sales reported for 1994. Fourth quarter 1995 net sales of $144.3 million decreased 21.0% from $182.4 million of net sales in the fourth quarter of 1994. During the third quarter of 1995, the Company announced the decision to phase out, over time, the business associated with anodized aluminum decorative moldings and extruded bilaminate and plastic moldings. The phase-out is expected to be completed in 1996. This product line contributed approximately $50.0 million in sales in 1995 compared to $74.0 million in 1994. A significant portion of the 1995 sales were eliminated as a result of car models that were discontinued. The Company's Mexican operations experienced significant increases in sales volumes in 1995. The acquisition of Bestop, Inc. contributed $32.2 million to net sales. These increases were offset by sales price reductions and lower than expected volumes of fully trimmed seats for the Ford Contour, Mercury Mystique and Ford Aerostar and lower production of the Caprice and Roadmaster. Cost of Sales Cost of sales as a percentage of net sales increased slightly in both the fourth quarter and the year of 1995 compared to 1994. The trend of raw material price increases and reduced selling prices to the Company's customers, as a result of long term agreements prevalent in the automotive industry, resulted in an adverse effect on the relationship of cost of sales to sales. Opportunities for cost reduction through engineering changes will improve this trend. The Company has consistently reflected the equity in earnings of affiliated companies within cost of sales. The effect of this inclusion reduced the cost of sales by approximately .8% in 1995 and .3% in 1994. Selling, General and Administrative Expenses Selling, general and administrative expenses for 1995 increased $3.8 million from the $21.9 million reported in 1994. The consolidation of selling, general and administrative expenses of Bestop, Inc. for 1995 of $3.9 million accounted for the entire increase. Interest Expense Interest expense in 1995 increased $2.4 million or 89.7% from 1994. Significantly higher debt level in 1995, primarily related to the Bestop, Inc. acquisition, is the principal reason for the increase in interest expense. 12 Net Earnings Net earnings in 1995 of $4.2 million decreased $8.3 million or 66.4% from the $12.5 million recorded in 1994. This decrease is primarily the result of losses sustained on the anodized aluminum decorative moldings and extruded bilaminate and plastic moldings business of $4.8 million in 1995 compared to net earnings of $4.0 million in 1994. Operating losses in both the second and third quarters of 1995 as a result of lower sales and rising costs of raw materials combined with selling price reductions in long term agreements were major contributors to this unfavorable 1995 results. Equity in earnings of affiliates was a significant contributor to the Company's consolidated net earnings for the year ended December 31, 1995. RESULTS OF OPERATIONS - 1994 VERSUS 1993 Net Sales Net sales of $566.8 million in 1994 were the highest in the Company's history and increased 33.4% compared to the 1993 net sales of $424.8 million. Fourth quarter 1994 net sales of $182.4 million increased 62.0% compared to $112.6 million in the fourth quarter of 1993. Fourth quarter 1994 sales were also the highest in the Company's history. The sales increase was due principally to the commencement of full production of fully trimmed seats for the recently introduced Ford Contour and Mercury Mystique models at the Company's new Excelsior Springs, Missouri plant, and the increased production of fully trimmed seats for the Ford Aerostar minivan at the Troy, Missouri plant. Industry sales of automobiles, vans and light trucks continued to have a strong consumer demand, particularly in the final months of 1994. Cost of Sales Cost of sales as a percentage of net sales declined slightly in 1994 to 92.4% compared to 92.7% in 1993. This slightly favorable trend was attributable to the significantly higher sales volume during the last six months of 1994. Higher raw material prices, particularly in metals, chemicals and plastics, and pressure for customer price concessions resulted in a trend toward reduced margins. During the fourth quarter of 1993, the Company decided to close certain plants, and in connection therewith established a plant closing accrual of $10.0 million for associate benefit costs, environmental costs, facilities maintenance and other, $4.0 million of which remained at December 31, 1994. The significant decrease was due to lower than expected associate severance payments, including benefits and facilities maintenance. The accrual reduction included $1.2 million of associate severance and benefits and $650,000 of facilities maintenance costs taken into income during the third and fourth quarters, 1994, respectively. Furthermore, in compliance with current guidelines, 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. Selling, General and Administrative Expenses Selling, general and administrative expenses in 1994 increased approximately $2.2 million from 1993 but decreased significantly to 3.9% of sales compared to 4.6% of sales in 1993. Incentive compensation, additional staffing, travel and professional services expense were the principal components of the increase. Interest Expense Interest expense in 1994 decreased $86,000 or 3.2% from 1993. This decrease was attributable to the lower debt level in the first and second quarters of 1994. Net Earnings (Loss) Net earnings in 1994 of $12.5 million or $2.95 per share compared with the net loss of $7.2 million or $1.70 per share a year earlier. Results for 1993 included a $9.6 million after tax provision for closing certain plants and a $3.8 million after tax provision to reflect a change in the method of accounting for postretirement benefits other than pensions. Net earnings from operations in 1993 exclusive of the two items mentioned above were $6.2 million or $1.47 per share. The improvement in 1994 was attributable to the significant 33.4% sales increase which included higher production of automobiles and light trucks nationwide, combined with cost reductions and improvements in productivity in several areas. 13 [GRAPHIC: This page also has two bar charts on the left side of the page; one showing a five-year range of Total Assets, the other showing a five-year range of Long-Term Debt. The values are as follows:]
1991 1992 1993 1994 1995 TOTAL ASSETS (In millions) $ 139 $ 156 $ 174 $ 212 $ 269 LONG-TERM DEBT (In millions) $ 46 $ 26 $ 22 $ 32 $ 69
Douglas & Lomason Company and Subsidiaries Consolidated Balance Sheets December 31, 1995 and 1994 (In thousands)
Assets 1995 1994 ---- ---- Current assets: Cash $ 4,587 $ 6,532 Accounts receivable (note 8) 93,486 99,928 Inventories (note 3) 26,082 19,344 Income taxes recoverable 3,442 -- Deferred tax assets (note 7) 2,635 2,843 Prepaid expenses and other current assets 1,541 810 -------- -------- Total current assets 131,773 129,457 Property, plant and equipment at cost less accumulated depreciation (note 4) 76,164 66,788 Goodwill and other intangibles (note 2) 38,179 2,695 Other assets 22,773 12,624 -------- -------- $268,889 $211,564 ======== ======== Liabilities and Shareholders' Equity Current liabilities: Current installments of long-term debt (note 6) $ 4,775 $ 5,938 Accounts payable 60,954 54,429 Accrued payroll 4,747 3,729 Income taxes payable -- 1,865 Accrued plant closing expenses (note 11) 367 3,783 Other accrued expenses (note 9) 14,876 9,847 -------- -------- Total current liabilities 85,719 79,591 Long-term debt, excluding current installments (note 6) 69,113 31,888 Postretirement benefits, other than pensions (note 10) 8,598 7,534 Deferred income taxes (note 7) 14,387 651 Other liabilities (note 12) 4,725 6,171 Shareholders' equity (note 13): Preferred stock, no par value. Authorized 500,000 shares; no shares issued -- -- Common stock, $2 par value. Authorized 10,000,000 shares; issued 4,243,021 in 1995 (4,228,720 in 1994) 8,486 8,457 Other capital 28,088 27,998 Retained earnings 54,543 52,049 Foreign currency translation adjustment (4,770) (2,775) -------- -------- Total shareholders' equity 86,347 85,729 -------- -------- $268,889 $211,564 ======== ======== See accompanying notes to consolidated financial statements.
14 [GRAPHIC: This page also has a bar chart on the right side of the page, showing a five-year range of Interest Expense. The values are as follows:]
1991 1992 1993 1994 1995 INTEREST EXPENSE (In millions) $5.4 $ 3.5 $ 2.7 $ 2.6 $ 5.0
Douglas & Lomason Company and Subsidiaries Consolidated Statements of Earnings Years ended December 31, 1995, 1994 and 1993 (In thousands, except per share data) 1995 1994 1993 ---- ---- ---- Net sales $ 561,187 $ 566,819 $ 424,843 Cost of sales 527,589 523,577 393,935 --------- --------- --------- Gross profit 33,598 43,242 30,908 Selling, general and administrative expenses 25,674 21,890 19,671 Provision for plant closings (note 11) -- -- 15,000 --------- --------- --------- Operating income (loss) 7,924 21,352 (3,763) --------- --------- --------- Other income (expenses): Interest expense (4,971) (2,620) (2,706) Interest income and other, net 1,283 962 451 --------- --------- --------- (3,688) (1,658) (2,255) --------- --------- --------- Earnings (loss) before income taxes and cumulative effect of change in accounting principle 4,236 19,694 (6,018) Income tax expense (benefit) (note 7) 45 7,208 (2,607) --------- --------- --------- Earnings (loss) before cumulative effect of change in accounting principle 4,191 12,486 (3,411) Cumulative effect at January 1, 1993 of change in accounting for postretirement benefits other than pensions, net of income tax benefit (note 10) -- -- (3,757) --------- --------- --------- Net earnings (loss) $ 4,191 $ 12,486 $ (7,168) ========= ========= ========= Earnings (loss) per share before cumulative effect of change in accounting principle $ .99 $ 2.95 $ (.80) Cumulative per share effect of change in accounting for post- retirement benefits other than pensions, net of income tax benefit -- -- (.90) --------- --------- --------- Net earnings (loss) per share $ .99 $ 2.95 $ (1.70) ========= ========= ========= Dividends per share $ .40 $ .40 $ .40 ========= ========= ========= Weighted average number of common and common equivalent shares outstanding 4,241,216 4,228,120 4,214,372 ========= ========= ========= See accompanying notes to consolidated financial statements.
15 [GRAPHIC: This page also has a bar chart on the left side of the page showing a five-year range of Shareholders' Equity. The values are as follows:]
1991 1992 1993 1994 1995 SHAREHOLDERS' EQUITY (In millions) $54.2 $85.9 $77.7 $85.7 $86.3
Douglas & Lomason Company and Subsidiaries Consolidated Statements of Shareholders' Equity Years ended December 31, 1995, 1994 and 1993 (In thousands) Foreign Currency Common Other Retained Translation Shareholders' Stock Capital Earnings Adjustment Equity ------ ------- -------- ----------- ------------- Balance at December 31, 1992 $8,389 $27,383 $50,109 $ -- $85,881 Net loss -- -- 7,168) -- (7,168) Dividends, $.40 per share -- -- (1,687) -- (1,687) Foreign currency translation adjustment -- -- -- (20) (20) Issuance of 32,275 shares under employee stock option plan 65 603 -- -- 668 ------ ------- ------- ------- ------- Balance at December 31, 1993 8,454 27,986 41,254 (20) 77,674 Net earnings -- -- 12,486 -- 12,486 Dividends, $.40 per share -- -- (1,691) -- (1,691) Foreign currency translation adjustment -- -- -- (2,755) (2,755) Issuance of 1,500 shares under employee stock option plan 3 12 -- -- 15 ------ ------- ------- ------- ------- Balance at December 31, 1994 8,457 27,998 52,049 (2,775) 85,729 Net earnings -- -- 4,191 -- 4,191 Dividends, $.40 per share -- -- (1,697) -- (1,697) Foreign currency translation adjustment -- -- -- (1,995) (1,995) Issuance of 15,000 shares under employee stock option plan 30 99 -- -- 129 Canceled shares (1) (9) -- -- (10) ------ ------- ------- ------- ------- Balance at December 31, 1995 $8,486 $28,088 $54,543 $(4,770) $86,347 ====== ======= ======= ======= ======== See accompanying notes to consolidated financial statements.
16 [GRAPHIC: This page also shows a bar chart on the right side of the page, showing a five-year range of Capital Additions. The values are as follows:]
1991 1992 1993 1994 1995 CAPITAL ADDITIONS (In millions) $ 6.1 $16.7 $20.5 $14.6 $18.4
Douglas & Lomason Company and Subsidiaries Consolidated Statements of Cash Flows Years ended December 31, 1995, 1994 and 1993 (In thousands) 1995 1994 1993 ---- ---- ---- Cash flows from operating activities: Net earnings (loss) $ 4,191 $ 12,486 $ (7,168) Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: Provision for plant closings -- -- 15,000 Cumulative effect of change in accounting for postretirement benefits other than pensions, net of tax benefit -- -- 3,757 Depreciation and amortization 14,148 13,212 12,002 Net gain on sale of property, plant and equipment (12) (107) (68) Provision for deferred income taxes 2,406 2,358 (6,386) Changes in operating assets and liabilities: Decrease (increase) in accounts receivable 8,085 (29,469) (14,860) Decrease (increase) in inventories 3,191 (5,356) 4,278 Decrease (increase) in prepaid expenses and other assets 6,023 (3,689) (4,216) Increase (decrease) in accounts payable (13,161) 23,328 11,252 Increase (decrease) in other current liabilities 1,653 6,417 (822) Decrease in plant closing accrual (3,416) (3,904) -- Increase (decrease)in other liabilities (382) 555 1,151 -------- -------- -------- Net cash provided by operating activities 22,726 15,831 13,920 -------- -------- -------- Cash flows from investing activities: Proceeds from the sale of property, plant and equipment 1,835 1,541 417 Capital expenditures (18,444) (14,629) (20,460) Acquisition of assets, net of liabilities assumed (43,488) -- -- Dividends received 4,410 -- -- -------- -------- -------- Net cash used in investing activities (55,687) (13,088) (20,043) -------- -------- -------- Cash flows from financing activities: Proceeds from issuance of long-term debt 42,000 16,000 -- Principal payments on long-term debt (6,235) (5,829) (5,331) Proceeds from (payments on) short-term borrowings (1,453) (7,000) 7,000 Proceeds from exercised stock options, net 119 15 668 Dividends paid (1,697) (1,691) (1,687) -------- -------- -------- Net cash provided by financing activities 32,734 1,495 650 -------- -------- -------- Effect of translation adjustment on cash (1,718) (451) (20) -------- -------- -------- Net increase (decrease) in cash (1,945) 3,787 (5,493) Cash at beginning of year 6,532 2,746 8,239 -------- -------- -------- Cash at end of year $ 4,587 $ 6,533 $ 2,746 ======== ======== ======== Supplemental disclosures of cash flow information: Cash paid during the year for: Interest $ 4,375 $ 2,547 $ 2,716 ======== ======== ======== Income taxes $ 415 $ 3,550 $ 5,079 ======== ======== ======== See accompanying notes to consolidated financial statements.
17 Douglas & Lomason Company and Subsidiaries Notes to Consolidated Financial Statements December 31, 1995, 1994 and 1993 (1) Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the financial statements of Douglas & Lomason Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The Company's investments in affiliates are accounted for on the equity method. Cash Equivalents For the purposes of the statements of cash flows, the Company considers all liquid debt instruments with original maturities of three months or less to be cash equivalents. Financial Instruments Financial instruments consist primarily of cash, accounts receivable, accounts payable, accrued expenses and bank debt. At December 31, 1995, 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). The last-in, first-out (LIFO) method was used for determining the cost of approximately 62% of total inventories at December 31, 1995, 99% at December 31, 1994, and 99% at December 31, 1993. The cost for the remaining portion of the inventories was determined using the first-in, first-out (FIFO) method. Tooling and Pre-production Design and Engineering Costs 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. Pre-production design and engineering costs incurred at the request of the customer, when significant, are capitalized and amortized over the years the costs benefit. Tooling and pre-production design and engineering costs that benefit future periods, less accumulated amortization, are included in other assets. Property, Plant and Equipment Property, plant and equipment are stated at cost. Plant and equipment under capital leases are stated at the present value of future minimum lease payments. 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. Plant and equipment held under capital leases and leasehold improvements are amortized straight line over the shorter of the lease term or estimated useful life of the asset. 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. Goodwill and Other Intangibles Goodwill arising from business acquisitions is amortized using the straight line method over 25 years. Other intangibles, including patents, customer lists, engineer drawings, trained workforce and trade name, are amortized over their estimated lives ranging from 6 to 40 years. The Company reviews the carrying value of goodwill for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Based on management's assessment of the future undiscounted operating cash flows of the acquired businesses, the carrying value of goodwill and other intangibles at December 31, 1995, has not been impaired. As of December 31, 1995, goodwill was $11.2 million, net of accumulated amortization of $262,000. Intangibles were $27.0 million and $2.7 million at December 31, 1995 and 1994, respectively, net of accumulated amortization of $1.6 million and $263,000, respectively. (1) Summary of Significant Accounting Policies (Cont.) Income Taxes Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." Under Statement No. 109, income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The adoption of Statement 109 did not have a material effect on the 1993 consolidated financial statements. Pensions and Postretirement Benefits Other Than Pensions Annual costs of the Company's pension and postretirement benefits other than pensions are determined actuarially in accordance with Statement of Financial Accounting Standards No. 87, "Employers' Accounting for Pensions," and No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." Translation of Foreign Currencies Assets and liabilities of foreign subsidiaries are generally translated at current exchange rates, and related 18 translation adjustments are reported as a component of shareholders' equity. Also included are the effects of exchange rate changes on intercompany transactions of a long-term nature. Income statement accounts are translated at the average rates during the period. Net Earnings Per Share Net earnings per share is computed using the weighted average number of shares of common stock and common stock equivalents outstanding during the year. Commitments and Contingencies Liabilities are recorded for loss contingencies, including environmental remediation costs, arising from claims, assessments, and other sources when the amount of the assessment and/or remediation cost is probable and can be reasonably estimated. Use of Estimates Management of the Company has made a number of estimates and assumptions related to the reporting of assets and liabilities and the disclosure of contingent liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. Stock-Based Employee Compensation Arrangements During 1995, the Financial Accounting Standards Board issued Statement No. 123, "Accounting for Stock-Based Compensation." Effective for fiscal years beginning after December 15, 1995, Statement No. 123 encourages companies to include the fair value of any stock awards issued as compensation expense within the income statement. Companies who choose to remain with Accounting Principles Board Opinion No. 25, using the intrinsic value method to account for stock awards, must disclose pro forma net income and earnings per share as if the fair value of the award had been included as compensation expense. The Company anticipates remaining with the intrinsic value method. Long-Lived Assets On March 31, 1995, the Financial Accounting Standards Board issued Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of." This Statement provides guidance for recognition and measurement of impairment of long-lived assets, certain identifiable intangibles and goodwill related both to assets to be held and used and assets to be disposed of. The Company will adopt this Statement in the first quarter of 1996 and anticipates the effect will be immaterial. Reclassification Certain amounts related to prior years have been reclassified to conform with the 1995 presentation. (2) Acquisition of Bestop, Inc. On June 8, 1995, the Company acquired the stock of Bestop, Inc. ("Bestop"), the leading designer and manufacturer in North America of soft tops and accessories for small sport utility vehicles, for $43.5 million in cash. The acquisition was funded from additional long-term borrowings. The acquisition was accounted for using the purchase method of accounting and the results of operations of Bestop from the date of acquisition have been included in the consolidated financial statements. The purchase price has been allocated to the net assets acquired based on their estimated fair values with the balance of the purchase price, $37.0 million, included in goodwill and other intangibles. Goodwill is being amortized over 25 years and other intangibles are being amortized over lives ranging from 6 to 40 years. The following unaudited pro forma information presents a summary of consolidated results of operations of the Company and Bestop as if the acquisition had occurred at the beginning of 1994, with pro forma adjustments to give effect to amortization of goodwill, interest expense on acquisition debt and certain other adjustments together with related income tax effects.
Years ended December 31, ------------------------ 1995 1994 ---- ---- (In thousands, except per share data) Net sales $589,553 $620,837 Net earnings $ 4,352 $ 12,059 Net earnings per share $ 1.03 $ 2.85
(3) Inventories Inventories consist of the following:
1995 1994 ---- ---- (In thousands) Raw materials $14,459 $14,512 Work in process 7,338 6,834 Tooling in process 4,203 1,617 Finished goods 9,587 5,839 ------- ------- Inventories at FIFO basis 35,587 28,802 Less adjustment of certain inventories to a LIFO basis 9,505 9,458 ------- ------- $26,082 $19,344 ======= =======
19 (4) Property, Plant and Equipment Property, plant and equipment consist of the following:
1995 1994 ---- ---- (In thousands) Land and land improvements $ 3,392 $ 3,070 Buildings and building improvements 29,067 28,194 Machinery and equipment 144,385 118,885 Construction in process 854 602 -------- -------- 177,698 150,751 Less accumulated depreciation 101,534 83,963 -------- -------- $ 76,164 $ 66,788 ======== ========
Amounts included above, which have been capitalized under capital lease obligations are as follows:
1995 1994 ---- ---- Machinery and equipment $ -- $6,182 Less accumulated depreciation -- 3,938 ----- ------ $ -- 2,244 ====== ======
(5) Other Assets Other assets include investments in affiliated companies of 50% of the common stock of Bloomington Normal Seating Company (BNSC) and 50% of the common stock of Shanghai Lomason Automotive Seating Systems Company Limited (Shanghai). BNSC manufactures seating systems while Shanghai supplies seat frames and metal stampings. Each company has a single customer for which it produces its products. At December 31, 1995, aggregate current assets of these companies approximated $26.5 million, aggregate current liabilities approximated $20.7 million and aggregate noncurrent assets approximated $14.1 million. Affiliated companies generated total net after tax earnings of $8.6 million in 1995. Prior to 1995, the Company's investment in and equity in earnings of affiliated companies was not significant. (6) Indebtedness Long-term debt is summarized as follows:
1995 1994 ---- ---- (In thousands) 6.50% effective interest rate revolving credit agreement $33,000 $16,000 9.95% term note, principal and interest quarterly through May 31, 1998 4,688 6,563 7.95% term note, principal and interest quarterly through October 31, 1999 10,000 12,500 7.80% term note, quarterly interest only through July 1999, 25,000 -- principal and interest quarterly through July 2003 Capital leases -- 1,163 Other 1,200 1,600 ------- ------- Total long-term debt 73,888 37,826 Less current installments 4,775 5,938 ------- ------- Long-term debt, excluding current installments $69,113 $31,888 ======= =======
In 1994, the Company entered into an unsecured revolving credit agreement aggregating $35.0 million with two banks. On June 8, 1995, this agreement was amended to increase the aggregate funds available to $60.0 million. Interest only payments are due at various dates at interest rates based on various factors which are at or below the banks' prime rate. This credit agreement expires on June 24, 1998, but may be extended by the Company for one additional year. All the above long-term debt is unsecured. During 1993, the Company acquired intangible assets in exchange for a $2.0 million obligation, payable in five equal annual installments through 1998. At December 31, 1995, the unpaid portion of this obligation was $1.2 million. The bank notes contain restrictive covenants regarding consolidated working capital and funded debt to capitalization. The Company was in compliance with all such covenants at December 31, 1995. The aggregate maturities of long-term debt are $4.8 million in 1996, $4.8 million in 1997, $36.8 million in 1998, $4.6 million in 1999 and $22.9 million thereafter. 20 (7) 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:
1995 1994 1993 ---- ---- ---- (In thousands) Domestic $2,624 $19,487 $(4,345) Foreign 1,612 207 (1,673) ------ ------- ------- $4,236 $19,694 $(6,018) ====== ======= =======
Components of income tax expense (benefit) are as follows:
1995 1994 1993 ---- ---- ---- (In thousands) Current: Federal $(4,635) $ 4,619 $ 3,438 State 442 231 343 Foreign 443 -- (2) ------- ------- ------- (3,750) 4,850 3,779 ------- ------- ------- Deferred: Federal 3,852 2,100 (4,969) State 379 234 (580) Foreign (436) 24 (837) ------- ------- ------- 3,795 2,358 (6,386) ------- ------- ------- $ 45 $ 7,208 $(2,607) ======= ======= =======
A reconciliation of the "expected" income tax expense (benefit) based on the federal corporate income tax rate of 35% (34% in 1993) to the actual income tax expense (benefit) is as follows:
1995 1994 1993 ---- ---- ---- (In thousands) Expected income tax expense (benefit) $ 1,483 $6,893 $(2,046) State income tax expense (benefit), net of federal income tax benefit 534 302 (156) Foreign taxes 384 -- -- Research and development tax credits -- (200) (332) Foreign tax rate differential (250) -- (268) Dividend received deduction (1,235) -- -- Change in valuation allowance (690) -- -- Other items, net (181) 213 195 ------- ------ ------- Actual income tax expense (benefit) $ 45 $7,208 $(2,607) ======= ====== ========
(7) Income Taxes (Cont.) The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 1995 and 1994, are as follows:
1995 1994 ---- ---- (In thousands) Deferred tax assets: Plant and equipment, due to difference in depreciation $ 1,281 $ 801 Accrued postretirement benefits deductible for tax purposes when paid 4,383 3,688 Other expenses deductible for tax purposes when paid 3,346 2,203 Accrued plant closing costs 1,407 3,700 Foreign net operating loss carryforward 756 4,580 -------- ------- Gross deferred assets 11,173 14,972 Less valuation allowance 773 1,463 -------- ------- Net deferred tax assets 10,400 13,509 -------- ------- Deferred tax liabilities: Plant and equipment, due to difference in depreciation 10,651 7,644 Intangible assets resulting from acquisition of subsidiary 10,119 -- Other items, net 1,382 3,673 -------- ------- Gross deferred tax liabilities 22,152 11,317 -------- ------- Net deferred tax (liabilities) assets $(11,752) $ 2,192 ======== =======
The valuation allowance for deferred tax assets as of January 1, 1995 and 1994 was $773,000 and $1,463,000, respectively. The net change in the total valuation allowance for the year ended December 31, 1995 was a decrease of $690,000, which resulted from the use of foreign net operating loss carryforwards. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods which the deferred tax assets are deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences, net of the existing valuation allowances at Decembr 31, 1995. 21 (8) Industry Segment The Company's operations are within the following industry segments: automotive products and other segments, which include 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:
1995 1994 1993 ---- ---- ---- (In thousands) Sales to customers Automotive products $521,569 $530,866 $397,356 All other segments 39,618 35,953 27,487 -------- -------- -------- $561,187 $566,819 $424,843 ======== ======== ======== Operating profit (loss) Automotive products $ 9,122 $ 23,454 $ (1,601) All other segments 2,016 2,548 1,457 -------- -------- -------- 11,138 26,002 (144) Corporate expenses (3,214) (4,650) (3,619) -------- -------- -------- Total operating profit (loss) $ 7,924 $ 21,352 $ (3,763) ======== ======== ======== Identifiable assets Automotive products $238,380 $183,358 $149,773 All other segments 15,376 14,617 12,033 -------- -------- -------- 253,756 197,975 161,806 Corporate assets 15,133 13,589 12,478 -------- -------- -------- Total assets $268,889 $211,564 $174,284 ======== ======== ========
Automotive product sales are comprised 85% of fully trimmed seating, seat frame assemblies and mechanisms, 6% of soft tops and accessories for the small sport utility vehicle and 9% of decorative moldings and energy management systems. During the year, the Company announced its intention to allow the decorative molding operations to discontinue in 1996. Management does not anticipate a significant loss on the ultimate disposal of the related assets. This product line represented $50.4 million, $73.7 million and $62.9 million of sales and ($4.8) million, $4.0 million and $4.0 million of pre-tax earnings (loss) for the years ended December 31, 1995, 1994 and 1993, respectively. Sales and accounts receivable are classified by ultimate customer and may have been sold through other Tier One suppliers. Automotive product sales and trade accounts receivable consist of the following components:
1995 1994 1993 ---- ---- ---- Automotive product sales Chrysler 25% 39% 51% Ford Motor 48 40 25 General Motors 12 14 15 All other 15 7 9 --- --- --- Total automotive sales 100% 100% 100% === === === 1995 1994 ---- ---- Automotive trade accounts receivable Chrysler 35% 34% Ford Motor 43 43 General Motors 8 12 All other 14 11 --- --- Total automotive trade accounts receivable 100% 100% === ===
Depreciation expense and capital expenditures of the automotive products segment were as follows:
1995 1994 1993 ---- ---- ---- (In thousands) Depreciation expense $11,815 $11,294 $10,700 Capital expenditures $15,273 $12,934 $18,200
Identifiable assets are those assets used in, or resulting from, the operation of a segment. Corporate assets, principally cash, administrative offices and other assets, are not classified as identifiable assets. (9) Pension Benefits The Company's domestic associates are eligible to participate in employee 401(k) savings plans, some of which provide for matching. The Company's matching expense for the plans in 1995 was $768,000. The Company also has defined contribution pension plans covering the majority of its salaried and hourly domestic associates. The benefits are based on either years of service and the associate'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 forty years. The Company's policy is to fund pension costs accrued. 22 The following table sets forth the funded status of the plans and amounts recognized in the Company's consolidated balance sheets at December 31, 1995 and 1994:
1995 1994 ---- ---- (In thousands) Actuarial present value of benefit obligations: Vested benefit obligations $37,202 $29,623 ======= ======= Accumulated benefit obligations $38,157 $30,325 ======= ======= Projected benefit obligations $44,565 $35,268 Plan assets at fair market value 49,754 39,100 ------- ------- Plan assets in excess of projected benefit obligations 5,189 3,832 Unamortized transition assets (2,294) (2,629) Unamortized prior service cost 1,940 2,073 Unrecognized net gain (7,747) (5,848) ------- ------- Accrued pension cost included in the consolidated balance sheets $ 2,912 $ 2,572 ======= =======
Assets in the plans consist mainly of investments in common stocks, private sector bonds and federal government obligations. The components of net pension costs for the years ended December 31, 1995, 1994 and 1993 were as follows:
1995 1994 1993 ---- ---- ---- (In thousands) Service cost $ 1,930 $ 2,376 $ 2,033 Interest cost 2,823 2,663 2,469 Actual (gain) loss on assets (11,080) 2,081 300 Net amortization and deferral 7,645 (5,716) (4,384) -------- ------- ------- Net pension cost $ 1,318 $ 1,404 $ 418 ======== ======= =======
Assumptions used in accounting for the pension plans as of December 31 were as follows:
1995 1994 1993 ---- ---- ---- Discount rate 7.25% 8.25% 7.25% Rate of increase in future compensation levels 4.00% 4.00% 4.00% Expected long-term rate of return on assets 9.00% 8.00% 8.00%
(10) Other Postretirement Benefits In addition to providing pension benefits, the Company sponsors two postretirement benefit plans for substantially all salaried associates 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 are capped at three times the 1993 cost levels. The life insurance plan provides death benefits that vary based on salary level at retirement. The Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pension," as of January 1, 1993. The effect of adopting Statement 106 for the year ended December 31, 1993 was a decrease on net earnings of approximately $4.0 million which included an increase in the pre-tax net periodic postretirement benefit cost of approximately $559,000. The following table presents the funded status of these obligations reconciled with amounts recognized in the Company's consolidated balance sheets at December 31, 1995 and 1994:
1995 1994 ---- ---- (In thousands) Accumulated postretirement benefit obligation: Retirees $ 4,934 $3,680 Fully eligible active salaried associates 546 231 Other active associates 5,790 4,456 ------- ------ 11,270 8,367 Plan assets at fair value, primarily insurance contracts 491 807 ------- ------ Accumulated postretirement benefit obligation in excess of plan assets 10,779 7,560 Unrecognized net loss (2,181) (26) ------- ------ Accrued postretirement benefit cost included in the consolidated balance sheets $ 8,598 $7,534 ======= ======
23 Net periodic postretirement benefit cost for 1995, 1994 and 1993 includes the following components:
1995 1994 1993 ---- ---- ---- (In thousands) Service cost $ 409 $ 456 $341 Interest cost 693 598 572 Actual return on assets (41) (60) (59) Net amortization and deferral 3 19 -- ------ ------ ---- Net periodic postretirement benefit cost $1,064 $1,013 $854 ====== ====== ====
(10) Other Postretirement Benefits (Cont.) 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 1995 was assumed to vary by age category and by type of health care service. For benefits provided to participants under age 65, the 1995 trend was assumed to be 14.0% for prescriptions drugs and 13.2% for all other costs. These rates were assumed to decrease gradually to approximately 6.0% 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, 1995 by 1.0% and the aggregate of the service and interest cost components of net periodic postretirement benefit cost for the year ended December 31, 1995 by .7%. The unrecognized net loss is being amortized over the average remaining service period of active plan participants (21 years). Assumptions used in accounting for other postretirement benefits as of December 31 were as follows:
1995 1994 1993 ---- ---- ---- Discount rate 7.25% 8.25% 7.25% Rate of increase in future compensation levels 4.00% 4.00% 4.00% Expected long-term rate of return on assets 9.00% 8.00% 8.00%
(11) Provision for Plant Closings 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. At December 31, the components of the accrual consist of the following:
1995 1994 ---- ---- (In thousands) Associates severance and benefit costs $161 $1,000 Facility maintenance costs and other 573 3,000 ---- ------ $734 $4,000 ==== ======
During 1994, $850,000 was charged to facility maintenance costs and other, and $800,000 for the payment of associate severance and benefit costs. These severance payments represented the majority of the 12% expected workforce reduction. In addition, $1.2 million of associate severance and benefits 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 cost of $2.5 million were reclassified from the provision for plant closing accrual to other accrued liabilities during the fourth quarter of 1994. During 1995, the Company completed its workforce reduction, resulting in a charge of $839,000 against the associate severance and benefits costs accrual. The $161,000 balance represents management's estimate of remaining workers' compensation and medical claims. Facility maintenance costs and other charges to the accrual approximated $2.1 million. In addition, $300,000 resulted in a reduction of expense in the first quarter associated with plant closings. The cash payments for remaining costs are expected to be made over the next two years. Selected financial information for these automotive facilities for the years ended December 31, were as follows:
1995 1994 1993 ---- ---- ---- (In thousands) Sales $ -- $34,799 $ 71,754 Pre-tax earnings (loss) $ -- $ 359 $(15,597)
(12) Environmental Matters The Company is involved in proceedings related to environmental matters under the Comprehensive Environmental Response Compensation and Liability Act (Superfund) and similar state laws at approximately three sites. The Company is one of several potentially responsible parties in one case. As of December 31, 1995 and 1994, the Company has recorded an accrual of $1.7 million and $3.5 million, respectively, for estimates of future clean-up costs in connection with its internal site assessment and compliance program. Estimates of future liability are based on an evaluation of currently available facts regarding each individual site and consider factors including existing 24 technology, presently enacted laws and regulations, and prior Company experience in remediation of contaminated sites. Changes in environmental regulations 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. (13) Stock Option Plans Under the Company's 1990 Stock Option Plan, 225,000 shares 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 6,375 at December 31, 1995, under 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 73,000 at December 31, 1995, under the 1990 Plan are exercisable at a weighted option price of $18.63 per share. Options granted, but not exercised, expire within five years from the date of the grant. Transactions for the years ended December 31, 1995, 1994 and 1993, were as follows:
Number of Shares ---------------------------- 1995 1994 1993 ----- ---- ---- Outstanding at beginning of year 100,375 66,175 100,075 Granted -- 38,000 -- Exercised (15,000) (1,500) (32,275) Canceled (6,000) (2,300) (1,625) ------- ------- ------- Outstanding at end of year 79,375 100,375 66,175 ======= ======= ======= Available for grant at end of year 47,350 42,850 78,550 ======= ======= =======
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, 1995 and 1994, 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, 1995. 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, 1995 and 1994, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1995, 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 note 10 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 LLP Detroit, Michigan January 29, 1996 25
Selected Financial and Other Data (In thousands, except per share and other data) 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- For the Year Net sales $ 561,187 $ 566,819 $ 424,843 $ 391,178 $ 375,618 Cost of sales 527,589 523,577 393,935 358,191 342,202 Gross profit 33,598 43,242 30,908 32,987 33,416 Capital additions 18,444 14,629 20,460 16,744 6,098 Depreciation expense 13,346 13,212 12,002 10,432 10,611 Interest expense 4,971 2,620 2,706 3,530 5,416 Income tax expense (benefit) 45 7,208 (2,607) 3,823 4,650 Earnings (loss) before cumulative effect for change in accounting principle 4,191 12,486 (3,411) 8,770 7,235 Net earnings (loss) 4,191 12,486 (7,168) 8,770 7,235 --------- --------- --------- --------- --------- At Year End Total assets $ 268,889 $ 211,564 $ 174,283 $ 156,351 $ 139,192 Working capital 46,054 50,313 36,205 50,633 45,723 Property, plant and equipment less accumulated depreciation 76,164 66,788 69,110 66,022 60,070 Long-term debt 69,113 31,888 21,826 25,655 46,486 Shareholders' equity 86,347 85,729 77,674 85,881 54,204 --------- --------- --------- --------- --------- Per Share Data Book value $ 20.35 $ 20.27 $ 18.37 $ 20.47 $ 17.21 Net earnings (loss) per share .99 2.95 (1.70) 2.25 2.29 Dividends .40 .40 .40 .30 .14 --------- --------- --------- --------- --------- Other Data Number of associates 5,912 6,039 5,697 5,817 5,562 Number of shareholders 726 757 806 846 858 Weighted average number of common and common equivalent shares outstanding 4,241,216 4,228,120 4,214,372 3,890,115 3,154,365 --------- --------- --------- --------- --------- 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.
Selected Financial And Other Data (In thousands, except per share and other data) 1990 1989 1988 1987 1986 ---- ---- ---- ---- ---- For the Year Net sales $ 418,118 $ 424,926 $ 325,498 $ 296,723 $ 286,536 Cost of sales 385,302 406,470 313,943 270,824 267,600 Gross profit 32,816 18,456 11,555 25,899 18,936 Capital additions 8,749 16,708 26,805 13,113 11,939 Depreciation expense 11,666 11,169 7,636 5,374 4,825 Interest expense 8,028 8,322 3,787 2,255 2,459 Income tax expense (benefit) 3,102 (2,296) (3,692) 4,838 2,669 Earnings (loss) before cumulative effect for change in accounting principle 4,964 (3,372) (4,629) 6,239 3,193 Net earnings (loss) 4,964 (3,372) (3,969) 6,239 3,193 --------- --------- --------- --------- --------- At Year End Total assets $ 148,820 $ 169,975 $ 161,916 $ 118,480 $ 99,631 Working capital 52,689 31,123 33,025 38,103 34,730 Property, plant and equipment less accumulated depreciation 64,726 67,886 62,525 43,361 35,631 Long-term debt 67,627 56,253 48,911 29,499 28,679 Shareholders' equity 47,382 41,408 45,096 51,838 42,441 --------- --------- --------- --------- --------- Per Share Data Book value $ 15.05 $ 13.68 $ 15.09 $ 16.71 $ 14.69 Net earnings (loss) per share 1.57 (1.12) (1.31) 2.05 1.11 Dividends .07 .25 .33 .33 .33 --------- --------- --------- --------- --------- Other Data Number of associates 5,424 6,285 6,076 3,994 3,612 Number of shareholders 887 903 891 842 702 Weighted average number of common and common equivalent shares outstanding 3,159,311 3,018,002 3,033,798 3,046,578 2,880,246 --------- --------- --------- --------- --------- 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.
Selected Financial And Other Data (In thousands, except per share and other data) 1985 ---- For the Year Net sales $ 266,626 Cost of sales 243,669 Gross profit 22,957 Capital additions 11,127 Depreciation expense 3,725 Interest expense 2,385 Income tax expense (benefit) 4,846 Earnings (loss) before cumulative effect of change in accounting principle 6,651 Net earnings (loss) 6,651 --------- At Year End Total assets $ 92,331 Working capital 38,845 Property, plant and equipment less accumulated depreciation 28,524 Long-term debt 24,450 Shareholders' equity 39,882 --------- Per Share Data Book value $ 13.97 Net earnings (loss) per share 2.33 Dividends .27 --------- Other Data Number of associates 3,581 Number of shareholders 630 Weighted average number of common and common equivalent shares outstanding 2,849,163 --------- 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.
26/27 (2-page spread)
Quarterly Financial Summary (In thousands, except per share data; unaudited) First Second Third Fourth Quarter Quarter Quarter Quarter Total ------- ------- ------- ------- ----- 1995 Net sales $155,058 $130,602 $131,264 $144,263 $561,187 Gross profit 11,298 5,471 6,759 10,070 33,598 Earnings (loss) before income taxes 4,756 (1,496) (1,665) 2,641 4,236 Net earnings (loss) 3,381 (456) (800) 2,066 4,191 Net earnings (loss) per share .80 (.11) (.19) .49 .99
First Second Third Fourth Quarter Quarter Quarter Quarter Total ------- ------- ------- ------- ----- 1994 Net sales $123,466 $123,253 $137,680 $182,420 $566,819 Gross profit 11,156 9,671 5,654 16,761 43,242 Earnings before income taxes 5,300 3,901 449 10,044 19,694 Net earnings 3,315 2,511 234 6,426 12,486 Net earnings per share .78 .60 .05 1.52 2.95
Stock Prices and Cash Dividends 1995 1994 - ------------------------------- ------------------------------- Market Price Market Price Quarter High Low Dividend Quarter High Low Dividend - ------- ---- --- -------- ------- ---- --- -------- First 19 15-1/2 $.10 First 20-1/2 15 $.10 Second 18 14 .10 Second 19-1/2 17-3/4 .10 Third 15-3/4 11-1/2 .10 Third 20-1/2 14-3/4 .10 Fourth 12-3/4 8-3/4 .10 Fourth 18 14-1/2 .10 ---- ---- $.40 $.40 ==== ====
27 SHAREHOLDER INFORMATION Stock Market Information at December 31, 1995 Symbol: DOUG Market: The Nasdaq Stock Market National Market System Shares outstanding: 4,243,021 16% owned by officers and directors 49% owned by institutions Shareholders: 726 shareholders Market Makers: First of Michigan Corporation Herzog, Heine, Geduld, Inc. Mayer & Schweitzer, Inc. Neuberger & Berman Sherwood Securities Corp. Annual Meeting The Annual Meeting of Shareholders will be held on Friday, April, 26, 1996, at 11:00 a.m. EDT at The Hotel Baronette in Novi, MI. All shareholders are cordially invited to attend. Dividends The Company has paid a cash dividend each year since 1957. Subject to approval of the Board of Directors, dividends are customarily paid on the Company's common stock on or about March 31, June 30, September 30 and December 31. Form 10-K and Other Financial Publications The form 10-K for the year ended December 31, 1995, as well as other financial publications of the Company, may be obtained without charge. Requests should be directed to Patricia L. Shelton, Assistant Secretary, at the corporate offices. Information may also be obtained via facsimile by dialing 1-800-PRO-INFO and entering the Company stock symbol DOUG or company code 190. 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. Shareholder Assistance Inquiries related to shareholder records, change of name, address, or ownership of stock, and lost or stolen stock certificates should be directed to the Transfer Agent and Registrar: State Street Bank and Trust Company P.O. Box 8200 Boston, MA 02266-8200 (800) 257-1770 Elimination of Duplicate Material If you receive duplicate mailings of quarterly and annual reports at one address, you may have multiple shareholder accounts. You can consolidate your multiple accounts into a single, more convenient account by contacting the Transfer Agent shown above. In addition, if more than one member of your household is receiving shareholder materials, you can eliminate the duplicate mailings by contacting the Transfer Agent. Independent Auditors KPMG Peat Marwick LLP, Detroit, MI Legal Counsel Dickinson, Wright, Moon, Van Dusen & Freeman, Detroit, MI Smith, Currie & Hancock, Atlanta, GA Trademarks This report makes reference to the Jeep(R) Wrangler. Jeep(R) is a registered trademark of Chrysler Corporation. 28 APPENDIX GRAPHIC AND IMAGE MATERIAL IN THIS DOCUMENT (as required pursuant to Rule 304(a) of Regulation S-T) The following is a narrative description of the graphic or image material which appears in Exhibit 13 to the Registrant's Annual Report on Form 10-K. Exhibit 13 contains pages extracted from the Registrant's 1995 Annual Report to Shareholders which are incorporated by reference into the Form 10-K. Page No. In 1995 Annual Report Description - ------- ----------- 14 Two bar charts; one showing a five-year range of Total Assets, and the other showing a five-year range of Long-Term Debt. Fully described in position in body of document. 15 Bar chart showing a five-year range of Interest Expense. Fully described in position in body of document. 16 Bar chart showing a five-year range of Shareholders' Equity. Fully described in position in body of document. 17 Bar chart showing a five-year range of Capital Additions. Fully described in position in body of document. EX-21 3 Exhibit 21
SUBSIDIARIES OF THE REGISTRANT DOUGLAS & LOMASON COMPANY Year Jurisdiction of Percent Name Acquired Incorporation Owned - ---- -------- --------------- ------- Muscogee Warehouse and State of Forwarding Company 1964 Georgia, USA 100 Douglas y Lomason de Ciudad Acuna, Mexico S.A. de C.V. 1987 Mexico 100 Douglas y Lomason de Saltillo, Coahuila S.A. de C.V. 1992 Mexico 100 Bestop, Inc. 1995 State of Delaware, USA 100
EX-23 4 CONSENT OF KPMG PEAT MARWICK LLP Exhibit 23 [Letterhead of KPMG Peat Marwick LLP] KPMG Peat Marwick LLP Suite 1200 150 West Jefferson Detroit, MI 48226-4429 The Board of Directors and Shareholders Douglas & Lomason Company: We consent to incorporation by reference in the Registration Statement (No. 33-36359) on the Form S-8 of Douglas & Lomason Company of our report dated January 29, 1996, relating to the consolidated balance sheets of Douglas & Lomason Company and subsidiaries as of December 31, 1995 and 1994, 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, 1995, and the related schedule, which report appears in the December 31, 1995, 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 LLP Detroit, Michigan March 27, 1996 Member Firm of Klynvald Peat Marwick Goerdeler EX-27 5 ART 5 FDS, D&L 1995 FORM 10-K405
5 1,000 12-MOS DEC-31-1995 DEC-31-1995 $ 4,587 0 93,486 0 26,082 131,773 177,698 101,534 268,889 85,719 73,888 8,486 0 0 77,861 268,889 561,187 561,187 527,589 527,589 25,674 0 4,971 4,236 45 4,191 0 0 0 4,191 .99 0
-----END PRIVACY-ENHANCED MESSAGE-----