page 13
[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 June 30, 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 -- 6,963,517 shares as of July 31, 1996.
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL INFORMATION
<TABLE>
WOLOHAN LUMBER CO.
CONDENSED BALANCE SHEETS
<CAPTION>
June 30 Dec. 31
1996 1995
<S> (Unaudited) (Note)
ASSETS (000's omitted)
CURRENT ASSETS
<C> <C>
Cash and cash equivalents $ 11,367 $ 13,919
Trade receivables 33,213 26,471
Inventories - at current cost 67,803 61,375
Reduction to LIFO cost (13,015) (12,836)
Inventories at the lower of last in,
first out cost or market 54,788 48,539
Other current accounts 2,171 3,112
TOTAL CURRENT ASSETS 101,539 92,041
OTHER ASSETS 2,077 2,149
NET PROPERTIES 67,284 68,250
TOTAL ASSETS $170,900 $162,440
LIABILITIES AND SHAREOWNERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 18,019 $ 15,258
Employee compensation and accrued expense 12,796 11,810
Short-term debt 8,000
Current portion of long-term debt 3,548 4,342
TOTAL CURRENT LIABILITIES 42,363 31,410
LONG-TERM DEBT, less current portion 23,733 26,674
SHAREOWNERS' EQUITY
Common stock 6,977 6,989
Additional capital 22,447 22,534
Retained earnings 75,380 74,833
TOTAL SHAREOWNERS' EQUITY 104,804 104,356
TOTAL LIABILITIES AND SHAREOWNERS' EQUITY $170,900 $162,440
<FN>
Note: The balance sheet at Dec. 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>
</TABLE>
<PAGE>
<TABLE>
WOLOHAN LUMBER CO.
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
JUNE 30
1996 1995
(000's omitted, except per share data)
<S>
<C> <C>
NET SALES $ 119,193 $ 123,089
Cost of sales 89,399 93,820
Gross Profit 29,794 29,269
OPERATING EXPENSES:
Selling, general and administrative 22,263 22,230
Depreciation 2,424 2,276
24,687 24,506
OPERATING INCOME 5,107 4,763
OTHER EXPENSES (INCOME):
Interest expense 690 847
Gain from sale of properties (696) (756)
Other (48) (83)
(54) 8
INCOME BEFORE INCOME TAXES 5,161 4,755
Income taxes 2,065 1,902
NET INCOME $ 3,096 $ 2,853
Average shares outstanding 6,990 7,152
Net income per share $.44 $.40
Dividends per share $.07 $.07
<FN>
See notes to condensed financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
WOLOHAN LUMBER CO.
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
<CAPTION>
SIX MONTHS ENDED
JUNE 30
1996 1995
(000's omitted, except per share data)
<S>
<C> <C>
NET SALES $ 192,646 $ 198,506
Cost of sales 145,068 151,138
Gross Profit 47,578 47,368
OPERATING EXPENSES:
Selling, general and administrative 40,706 39,371
Depreciation 4,818 4,476
45,524 43,847
OPERATING INCOME 2,054 3,521
OTHER EXPENSES (INCOME):
Interest expense 1,324 1,560
Gain from sale of properties (629) (307)
Other (1,187) (1,261)
(492) (8)
INCOME BEFORE INCOME TAXES 2,546 3,529
Income taxes 1,020 1,413
NET INCOME $ 1,526 $ 2,116
Average shares outstanding 6,998 7,153
Net income per share $.22 $.30
Dividends per share $.14 $.14
<FN>
See notes to condensed financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
WOLOHAN LUMBER CO.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
<CAPTION>
SIX MONTHS ENDED
JUNE 30
1996 1995
(000's omitted, except per share data)
<S>
<C> <C>
NET CASH USED IN OPERATING ACTIVITIES $ (2,608) $(4,772)
NET CASH USED IN INVESTING ACTIVITIES (3,230) (4,143)
NET CASH FROM FINANCING ACTIVITIES 3,286 2,714
DECREASE IN CASH AND CASH EQUIVALENTS (2,552 (6,201)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 13,919 22,072
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 11,367 $ 15,871
<FN>
See notes to condensed financial statements
</FN>
</TABLE>
<PAGE>
WOLOHAN LUMBER CO.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 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 outside factors and, accordingly,
its operating results for the three months and six months ended
June 30, 1996 are not necessarily indicative of the results that
may be expected for the entire year ending Dec. 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 Dec. 31, 1995.
NOTE B - EARNINGS PER SHARE
The Company calculates earnings per share based on the average
number of shares outstanding for the period. Common stock
equivalents had no material dilutive effect for the periods
presented.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Results Of Operations
Net income for the second quarter of 1996 was $3.1 million (44
cents per share), versus $2.9 million (40 cents per share) for the
same period of 1995. The improvement in second-quarter earnings
resulted from higher gross margins which more than offset a 3-
percent decline in sales. For the first six months of 1996, net
income was $1.5 million (22 cents per share), compared with $2.1
million (30 cents per share) for the same period of 1995.
Sales totaled $119.2 million in the second quarter of 1996, a 3-
percent decline from second-quarter 1995. The sales decline in
the second quarter resulted from a 17-percent decrease in consumer
(DIY) sales which more than offset a 14-percent improvement in
contractor (builder and remodeler) sales. Sales at comparable
stores (stores in operation prior to April 1, 1995) were down 5
percent from the same period of 1995, and resulted from an 18-
percent decline in consumer sales and a 10-percent increase in
contractor sales. For the first six months of 1996, sales were
$192.6 million compared with $198.5 million in the same period of
1995, a decrease of 3 percent. Contractor sales increased 10
percent and consumer sales decreased 16 percent for the six-month
period. Comparable store sales for the 1996 six-month period were
down 4 percent.
The sales mix for the second quarter of 1996 was 46-percent
consumer sales and 54-percent contractor sales compared with 54-
percent consumer sales and 46-percent contractor sales for the
second quarter of 1995. The 1996 sales mix for the six months was
43 percent consumer sales and 57 percent contractor sales, versus
a 50/50 mix in 1995.
Gross margins increased 120 basis points to 25 percent in the
second quarter of 1996, compared with the second quarter of 1995.
The improvement in margins was the result of improvements in core-
product categories (lumber, building materials, cabinets and
millwork). Total margin dollars were $.5 million higher compared
with 1995's second quarter.
Total expenses in the second quarter of 1996 were equal to 1995's
second quarter despite approximately $400,000 of expenses incurred
related to upgrading information technology
The effective tax rate (federal and state) for second quarter 1996
was 40 percent, the same as second quarter 1995.
Financial Condition
At June 30, 1996, the Company's balance sheet remains strong. Net
working capital at June 30, 1996, totaled $59.2 million, compared
with $61.4 million at June 30, 1995, and $60.6 million at December
31, 1995. The current ratio at June 30, 1996, was 2.4 to 1,
compared with 2.5 to 1 at June 30, 1995, and 2.9 to 1 at Dec. 31,
1995.
Cash and cash equivalents were $11.4 million at June 30, 1996,
compared to $15.9 million at June 30, 1995, and $13.9 million at
Dec. 31, 1995. The liquidity ratio at June 30, 1996, was .27 to
1, compared to .39 to 1 at June 30, 1995, and .44 to 1 at Dec. 31,
1995. Cash and cash equivalents increased $3.9 million during the
1996 second quarter with operating activities producing $5.6
million of cash. The major uses of cash in the 1996 second quarter
were for net property additions, $2.7 million, and reduction of
long-term debt of $1.5 million. Short-term borrowings totaled $8
million at June 30, 1996, compared with $5 million at June 30,
1995.
The Company expects that net cash from operating activities and
available lines of credit should be adequate to meet future
working capital needs and capital expenditures for 1996. The
Company acquired two stores during the 1996 second quarter. The
Company continues to seek opportunities for growth through
acquisitions of additional stores.
Invested capital (long-term debt and shareowner's equity) was
equal to 75% of total assets at June 30, 1996, compared to 76% at
June 30, 1995, and 81% at year end 1995. The total debt-to-asset
ratio was lowered to .14:1 at June 30, 1996, from .16:1 at year-
end 1995. The ratio of equity to total assets was .61 to 1 at
June 30, 1996, compared to .64 to 1 at year end 1995. The Company
purchased 30,000 shares of its common stock during the second
quarter of 1996.
Outlook
The Company is excited about the outlook for the second half of
1996. July 1996 sales exceeded July 1995 sales by 13 percent.
The Company intends to sell to 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 by executing strategies to improve sales of major
projects including kitchen and bath, decks, sheds, pole barns,
garages, and major remodeling projects. The Company is strongly
focused on the priorities of market-share improvement, people
development and improved profitability.
PART II -- OTHER INFORMATION
ITEM 3. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The following information is furnished with respect to the
Annual Meeting of security holders of the Registrant held during April
1996:
(a) A meeting was held on April 25, 1996 and was an Annual
Meeting.
(b) Not Applicable
(c) At such meeting the following nominees for election
as directors were elected to hold office until the next
annual meeting of stockholders or until their
successors are elected and qualified. The votes cast with
respect to each nominee for director are as follows:
Votes to Withhold
Votes for Authority to Vote
Nominee Nominee for the Nominee
Richard V. Wolohan 5,141,931 107,989
David F. Wallace 5,142,571 107,349
Ervin E. Wardlow 5,142,394 107,526
Hugo E. Braun, Jr. 5,142,986 106,934
James L. Wolohan 5,142,850 107,070
F.R. Lehman 5,142,488 107,432
Leo B. Corwin 5,142,926 106,994
Lee A. Shobe 5,142,986 106,934
Charles R. Weeks 5,142,986 106,934
ITEM 4. 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: August 12, 1996 David G. Honaman
David G. Honaman
Vice President - Administration
and Chief Financial Officer
Date: August 12, 1996 Edward J. Dean
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.
WOLOHAN LUMBER CO.
Registrant
Date: August 12, 1996
David G. Honaman
Vice President - Administration
and Chief Financial Officer
Date: August 12, 1996
Edward J. Dean,
Corporate Controller
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 11,367,000
<SECURITIES> 0
<RECEIVABLES> 33,213,000
<ALLOWANCES> 0
<INVENTORY> 54,788,000
<CURRENT-ASSETS> 101,539,000
<PP&E> 123,213,000
<DEPRECIATION> 55,929,000
<TOTAL-ASSETS> 170,900,000
<CURRENT-LIABILITIES> 42,363,000
<BONDS> 0
0
0
<COMMON> 6,977,000
<OTHER-SE> 97,827,000
<TOTAL-LIABILITY-AND-EQUITY> 170,900,000
<SALES> 192,646,000
<TOTAL-REVENUES> 49,394,000
<CGS> 145,068,000
<TOTAL-COSTS> 40,389,000
<OTHER-EXPENSES> 4,818,000
<LOSS-PROVISION> 317,000
<INTEREST-EXPENSE> 1,324,000
<INCOME-PRETAX> 2,546,000
<INCOME-TAX> 1,020,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,526,000
<EPS-PRIMARY> .22
<EPS-DILUTED> 0
</TABLE>
