SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the quarter ended March 31, 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 0-6169
WOLOHAN LUMBER CO.
(Exact name of registrant as specified in its charter)
Michigan
(State or other jurisdiction of incorporation or organization)
38-1746752
(I.R.S. Employer Identification Number)
1740 Midland Road, Saginaw, Michigan 48603
(Address of principal executive offices)
(517) 793-4532
(Registrant's telephone number, including area code)
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 the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date.
Common stock, $1 par value -- 7,156,488 shares as of April 30, 1995.
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<TABLE>
<CAPTION>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Information
WOLOHAN LUMBER CO.
CONDENSED BALANCE SHEETS
<S> (Unaudited) (Note)
March 31 December 31
(000's omitted) 1995 1994
ASSETS
CURRENT ASSETS <C> <C>
Cash and cash equivalents 14,122 22,072
Trade receivables 22,512 25,961
Inventories - at current cost 78,126 64,555
Reduction to LIFO cost (14,895) (14,549)
Inventories at the lower of last
in, first out cost or market 63,231 50,006
Other current accounts 3,180 2,832
TOTAL CURRENT ASSETS 103,045 100,871
OTHER ASSETS 3,155 2,174
NET PROPERTIES 69,014 68,002
TOTAL ASSETS 175,214 171,047
LIABILITIES AND SHAREOWNERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable 20,923 21,789
Employee comp and accrued expenses 8,630 12,345
Short-term debt 11,000
Current portion of long-term debt 3,052 1,970
TOTAL CURRENT LIABILITIES 43,605 36,104
LONG-TERM DEBT, less current portion 27,870 30,035
DEFERRED INCOME TAXES 697 697
SHAREOWNERS' EQUITY
Common stock 7,156 7,146
Additional capital 24,038 23,979
Retained earnings 71,848 73,086
TOTAL SHAREOWNERS' EQUITY 103,042 104,211
TOTAL LIAB AND SHAREOWNERS' EQUITY 175,214 171,047
<FN>
Note: The balance sheet at December 31, 1994, has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
See notes to condensed financial statements.
</FN>
</TABLE>
<TABLE>
<PAGE>
WOLOHAN LUMBER CO.
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
<CAPTION>
THREE MONTHS ENDED MARCH 31
1995 1994
(000's omitted, except per share data)
<S> <C> <C>
NET SALES 75,417 76,528
Cost of sales 57,318 59,219
18,099 17,309
Other income 505 474
Gain from sale of properties 224 27
18,828 17,810
OPERATING EXPENSES:
Selling, general and administrative 17,141 17,287
Depreciation 2,200 1,885
Interest 713 764
20,054 19,936
LOSS BEFORE INCOME TAXES (1,226) (2,126)
Income taxes (credit) (489) (819)
NET LOSS (737) (1,307)
Average shares outstanding 7,155 7,145
Net loss per share (.10) (.18)
Dividends per share .07 .07
<FN>
See notes to condensed financial statements.
</TABLE>
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<TABLE>
WOLOHAN LUMBER CO.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
<CAPTION>
THREE MONTHS ENDED MARCH 31
1995 1994
(000's omitted, except per share data)
<S> <C> <C>
NET CASH USED IN OPERATING ACTIVITIES (14,377) (16,261)
NET CASH USED IN INVESTING ACTIVITIES (2,989) (3,383)
NET CASH FROM FINANCING ACTIVITIES 9,416 9,714
DECREASE IN CASH AND CASH EQUIVALENTS (7,950) (9,930)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 22,072 22,303
CASH AND CASH EQUIVALENTS AT END OF PERIOD 14,122 12,373
<FN>
See notes to condensed financial statements
</FN>
</TABLE>
<PAGE>
WOLOHAN LUMBER CO.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1995
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included.
The Company's business is seasonal in nature and subject to general economic
conditions and other outside factors and, accordingly, its operating results
for the three months ended March 31, 1995, are not necessarily indicative of
the results that may be expected for the entire year ending December 31, 1995.
For further information, refer to the financial statements and footnotes
included in the Company's annual report on Form 10-K for the year ended
December 31, 1994.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results Of Operations
Sales totaled $75.4 million in the first quarter, a 1-percent decline from
first-quarter 1994. An improvement in gross margins more than offset the
sales decline and reduced the first quarter loss to $700,000 (10 cents per
share) from $1.3 million (18 cents per share) for the same period of 1994.
The sales decline in the first quarter resulted from a 5-percent decrease in
consumer (DIY) sales which more than offset a 1-percent improvement in
professional contractor sales. Sales at comparable stores (stores in
operation prior to Jan. 1, 1994) were down 7 percent from the same period
of 1994, and resulted from a 14-percent decline in consumer sales and a
2-percent decrease in contractor sales. A slowdown in housing starts,
significantly lower selling prices for lumber, a slowdown in consumer
spending, and increased competition all combined to depress sales.
The sales mix for the first quarter of 1995 was 43-percent consumer sales
and 57-percent contractor sales compared to 45-percent consumer and
55-percent contractor for the first quarter of 1994.
Gross margins were 24.0 percent in the first quarter, an increase of
140 basis points from the depressed margins of first-quarter 1994. More
stability in the pricing of lumber and construction panels and a lower LIFO
charge were the primary causes of the margin increase.
Selling, general and administrative expenses were 22.7 percent of sales in
the first quarter of 1995, compared with 22.6 percent of sales for the
corresponding period in 1994. Depreciation expense increased $300,000, or
17 percent, from first-quarter 1994 and reflects the six new stores added
during 1994.
The effective tax rate (federal and state) for first quarter 1995 was 40%,
compared to 38.5% for first quarter 1994. The effective income tax rate is
a function of the proportion of the Company's tax-exempt interest and other
non-deductible expenses in relation to taxable income.
Financial Condition
At March 31, 1995, the Company's balance sheet remains strong. Net working
capital at March 31, 1995 totaled $59.4 million, compared to $58.2 million
at March 31, 1994. The current ratio at March 31, 1995 was 2.4 to 1,
compared to 2.2 to 1 at March 31, 1994, and 2.8 at December 31, 1994.
Cash and cash equivalents were $14.1 million at March 31, 1995, compared to
$12.4 million at March 31, 1994 and $22.1 million at December 31, 1994. The
liquidity ratio was .32 to 1, compared to .26 to 1 at March 31, 1994, and .61
to 1 at December 31, 1994.
The major use of cash in the first quarter was for the seasonal buildup of
inventories, which increased $14.3 million from year-end 1994. The increase
in inventory was financed primarily by $11 million of short-term borrowings.
The Company expects that funds from operations and available lines of credit
should be adequate to meet future working capital needs and capital
expenditures for 1995.
Invested capital (long-term debt and shareowner's equity) was equal to 75% of
total assets at March 31, 1995, compared to 72% at March 31, 1994, and 78% at
year-end 1994. The ratio of equity to total assets was .59 to 1 at March 31,
1995, compared to .54 to 1 at March 31, 1994, and .61 to 1 at year end 1994.
Outlook
The negative factors affecting first-quarter sales are expected to influence
sales for the balance of 1995. As a result, 1995 will be a difficult year
in which to achieve record sales or equal last year's profits. The Company
is focusing its time and energy on improving the competency and commitment of
its people to generate outstanding customer service. The Company is striving
to better execute its strategy of selling project sales that involve the
major purchase of products such as lumber, basic building materials, millwork,
and kitchen cabinets. The Company's challenge is to become leaner and
stronger and better positioned for renewed growth.
<PAGE>
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Reports on Form 8-K
The Company filed no reports on Form 8-K during the quarter for which
this Report is filed.
<PAGE>
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 thereto duly authorized.
WOLOHAN LUMBER CO.
Registrant
Date: May 10, 1995 James L. Wolohan
Chairman of the Board,
President and Chief Executive Officer
Date: May 10, 1995 Edward J. Dean
Corporate Controller
(Principal Accounting Officer)
<PAGE>
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 thereto duly authorized.
Date: May 10, 1995 James L. Wolohan
Chairman of the Board,
President and Chief Executive Officer
Date: May 10, 1995 Edward J. Dean,
Corporate Controller
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> $14,122,000
<SECURITIES> 0
<RECEIVABLES> $22,512,000
<ALLOWANCES> 0
<INVENTORY> $63,231,000
<CURRENT-ASSETS> $103,045,000
<PP&E> $69,014,000
<DEPRECIATION> $2,200,000
<TOTAL-ASSETS> $175,214,000
<CURRENT-LIABILITIES> $43,605,000
<BONDS> 0
<COMMON> 7,156,000
0
0
<OTHER-SE> $95,886,000
<TOTAL-LIABILITY-AND-EQUITY> $175,214,000
<SALES> $75,417,000
<TOTAL-REVENUES> $75,417,000
<CGS> $57,318,000
<TOTAL-COSTS> $17,141,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $713,000
<INCOME-PRETAX> $(1,226,000)
<INCOME-TAX> $(489,000)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $(737,000)
<EPS-PRIMARY> $(.10)
<EPS-DILUTED> 0
</TABLE>
