[DESCRIPTION] 10Q FORM, FINANCIAL DOCUMENTS
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
For the quarter ended March 31, 1996
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 38-1746752
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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 -- 7,007,492 shares as of April 30, 1996.
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<CAPTION>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Information
WOLOHAN LUMBER CO.
CONDENSED BALANCE SHEETS
March 31 December 31
1996 1995
<S> (Unaudited) (Note)
ASSETS (000's omitted)
CURRENT ASSETS <C> <C>
Cash and cash equivalents $ 7,429 $ 13,919
Trade receivables 24,533 26,471
Inventories - at current cost 71,891 61,375
Reduction to LIFO cost (13,186) (12,836)
Inventories at the lower of last in,
first out cost or market 58,705 48,539
Other current accounts 3,826 3,112
TOTAL CURRENT ASSETS 94,493 92,041
OTHER ASSETS 3,137 2,149
NET PROPERTIES 66,995 68,250
TOTAL ASSETS $164,625 $162,440
LIABILITIES AND SHAREOWNERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 17,890 $ 15,258
Employee compensation and accrued expenses 10,439 11,810
Short-term debt 5,000
Current portion of long-term debt 3,679 4,342
TOTAL CURRENT LIABILITIES 37,008 31,410
LONG-TERM DEBT, less current portion 25,115 26,674
SHAREOWNERS' EQUITY
Common stock 7,007 6,989
Additional capital 22,721 22,534
Retained earnings 72,774 74,833
TOTAL SHAREOWNERS' EQUITY 102,502 104,356
TOTAL LIABILITIES AND SHAREOWNERS' EQUITY $164,625 $162,440
<FN>
Note: The balance sheet at December 31, 1995, 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>
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WOLOHAN LUMBER CO.
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1996 1995
(000's omitted, except per share data)
<S> <C> <C>
NET SALES $ 73,453 $ 75,417
Cost of sales 55,669 57,318
17,784 18,099
Other income 491 505
Gain from sale of properties 581 224
18,856 18,828
OPERATING EXPENSES:
Selling, general and administrative 18,443 17,141
Depreciation 2,394 2,200
Interest 634 713
21,471 20,054
LOSS BEFORE INCOME TAXES (2,615) (1,226)
Income taxes (credit) (1,045) (489)
NET LOSS $ (1,570) $ (737)
Average shares outstanding 7,005 7,155
Net loss per share $ (.22) $ (.10)
Dividends per share $ .07 $ .07
<FN>
See notes to condensed financial statements.
</FN>
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WOLOHAN LUMBER CO.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1996 1995
(000's omitted, except per share data)
<S> <C> <C>
NET CASH USED IN OPERATING ACTIVITIES $ (8,192) $ (14,377)
NET CASH USED IN INVESTING ACTIVITIES (587) (2,989)
NET CASH FROM FINANCING ACTIVITIES 2,289 9,416
DECREASE IN CASH AND CASH EQUIVALENTS (6,490) (7,950)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 13,919 22,072
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 7,429 $ 14,122
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<FN>
See notes to condensed financial statements
</FN>
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WOLOHAN LUMBER CO.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1996
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, 1996, are not necessarily indicative of the results
that may be expected for the entire year ending December 31,
1996.
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, 1995.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Results Of Operations
Sales totaled $73.5 million in the first quarter of 1996, a 3-
percent decline from first-quarter 1995. The lower sales
combined with higher expenses offset some improvement in gross
margins and resulted in a 1996 first quarter loss of $1.6 million
(22 cents per share); versus a $.7 million loss (10 cents per
share) for the same period of 1995. The Company's first quarter
historically has the lowest sales volume volume which often
results in a net loss.
The sales decline in the first quarter resulted from a 13-percent
decrease in consumer (DIY) sales which more than offset a 5-
percent improvement in contractor (builder and remodeler) sales.
Sales at comparable stores (stores in operation prior to Jan. 1,
1995) were down 4 percent from the same period of 1995, and
resulted from a 14-percent decline in consumer sales and a 3-
percent increase in contractor sales. Harsh winter weather,
lower selling prices for lumber, sluggish consumer spending and
increased competition all combined to depress sales.
The sales mix for the first quarter of 1996 was 39-percent
consumer sales and 61-percent contractor sales compared to 43-
percent consumer and 57-percent contractor for the first quarter
of 1995.
Gross margins increased slightly to 24.2 percent in the first
quarter of 1996, compared with 24 percent for the first-quarter
of 1995.
Other income increased $.3 million in the first quarter of 1996
compared to 1995's first quarter due to a gain on the sale of a
closed facility.
Selling, general and administrative expenses in the first
quarter of 1996 increased $1.3 million, or 8 percent, from first
quarter 1995 and resulted primarily from expenses related to
upgrading information technology and for staff training.
The effective tax rate (federal and state) for first quarter
1996 was 40 percent, the same as first quarter 1995.
Financial Condition
At March 31, 1996, the Company's balance sheet remains strong.
Net working capital at March 31, 1996 totaled $57.5 million,
compared to $59.4 million at March 31, 1995. The current ratio
at March 31, 1996 was 2.6 to 1, compared to 2.4 to 1 at March
31, 1995, and 2.9 to 1 at Dec. 31, 1995.
Cash and cash equivalents were $7.4 million at March 31, 1996,
compared to $14.1 million at March 31, 1995 and $13.9 million at
Dec. 31, 1995. The liquidity ratio at March 31, 1996 was .20
to 1, compared to .32 to 1 at March 31, 1995, and .44 to 1 at
Dec. 31, 1995.
The major use of cash in the first quarter was for the seasonal
buildup of inventories, which increased $10.2 million from year-
end 1995. Short-term borrowings totaled $5 million at March 31,
1996 compared with $11 million at March 31, 1995.
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 1996. The Company
added one new store during the first quarter and expects to
acquire two stores in the second quarter. The Company continues
to seek opportunities for growth through acquisitions.
Invested capital (long-term debt and shareowner's equity) was
equal to 78% of total assets at March 31, 1996, compared to 75%
at March 31, 1995, and 81% at year-end 1995. The total debt-to-
asset ratio was lowered to .15:1 at March 31, 1996 from .16:1 at
year-end 1995. The ratio of equity to total assets was .62 to 1
at March 31, 1996, compared to .59 to 1 at March 31, 1995, and
.64 to 1 at year end 1995.
Outlook
Despite disappointing first quarter financial results, the
Company has made significant progress in executing key elements
of its 1996 Plan and is optimistic that sales and profits will
improve significantly with warmer, dryer weather. The Company
expects to sell many of its contractors a more complete package
of home construction products which will improve both sales and
gross margins. The Company is working aggressively to improve
consumer sales. It is also achieving success in kitchen sales and
is executing strategies to improve sales of other major projects
including decks, sheds, pole barns, garages and major remodeling
projects. The Company is progressing toward an objective of
clearly positioning itself as a sales-market-driven company with
knowledgeable sales and service-oriented associates.
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.
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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, 1996 David G. Honaman
David G. Honaman,
Vice President -- Administration
and Chief Financial Officer
Date: May 10, 1996 Edward J. Dean
Edward J. Dean,
Corporate Controller
(Principal Accounting Officer)
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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, 1996
David G. Honaman,
Vice President -- Administration and
Chief Financial Officer
Date: May 10, 1996
Edward J. Dean,
Corporate Controller
(Principal Accounting Officer)
page 9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 7,429,000
<SECURITIES> 0
<RECEIVABLES> 24,533,000
<ALLOWANCES> 0
<INVENTORY> 58,705,000
<CURRENT-ASSETS> 94,493,000
<PP&E> 66,995,000
<DEPRECIATION> 2,395,000
<TOTAL-ASSETS> 164,625,000
<CURRENT-LIABILITIES> 37,008,000
<BONDS> 0
0
0
<COMMON> 7,007,000
<OTHER-SE> 95,495,000
<TOTAL-LIABILITY-AND-EQUITY> 164,625,000
<SALES> 73,453,000
<TOTAL-REVENUES> 18,856,000
<CGS> 55,669,000
<TOTAL-COSTS> 18,319,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 124,000
<INTEREST-EXPENSE> 634,000
<INCOME-PRETAX> (2,615,000)
<INCOME-TAX> (1,045,000)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,570,000)
<EPS-PRIMARY> (.22)
<EPS-DILUTED> 0
</TABLE>
