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 29, 1997
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 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 -- 6,914,308 shares as of April 30, 1997.
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL INFORMATION
WOLOHAN LUMBER CO.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
Mar. 29, Dec. 28,
1997 1996
(Unaudited) (Note)
ASSETS (000's omitted)
CURRENT ASSETS
<C> <C>
Cash and cash equivalents $ 6,163 $ 15,485
Trade receivables 30,413 32,722
Inventories - at current cost 72,099 59,455
Reduction to LIFO cost (15,051) (14,702)
Inventories at the lower of last in,
first out cost or market 57,048 44,753
Other current accounts 3,340 3,762
TOTAL CURRENT ASSETS 96,964 96,722
OTHER ASSETS 2,595 2,311
NET PROPERTIES 62,181 63,676
TOTAL ASSETS $ 161,740 $162,709
LIABILITIES AND SHAREOWNERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 18,952 $ 15,565
Employee compensation and accrued expenses 11,209 12,678
Current portion of long-term debt 5,290 6,790
TOTAL CURRENT LIABILITIES 35,451 35,033
LONG-TERM DEBT, less current portion 19,858 19,883
SHAREOWNERS' EQUITY
Common stock 6,916 6,912
Additional capital 21,877 21,828
Retained earnings 77,638 79,053
TOTAL SHAREOWNERS' EQUITY 106,431 107,793
TOTAL LIABILITIES AND SHAREOWNERS' EQUITY $161,740 $162,709
</TABLE>
Note: The balance sheet at December 28, 1996, 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.
[FN]
See notes to condensed financial statements.
</PAGE>
<PAGE>
WOLOHAN LUMBER CO.
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MAR. 29, MAR. 31,
1997 1996
(000's omitted, except per share data)
<C> <C>
NET SALES $ 77,354 $ 73,453
Cost of sales 58,631 55,669
Gross Profit 18,723 17,784
OPERATING EXPENSES:
Selling, general and administrative 17,899 18,443
Depreciation 2,488 2,394
Total operating expenses 20,387 20,837
OPERATING LOSS (1,664) (3,053)
OTHER EXPENSES (INCOME):
Interest expense 541 634
Gain from sale of properties (26) (581)
Other (598) (491)
(83) (438)
LOSS BEFORE INCOME TAXES (1,581) (2,615)
Income taxes (credit) (650) (1,045)
NET LOSS $ (931) $(1,570)
Average shares outstanding 6,916 7,005
Net loss per share $(.13) $(.22)
Dividends per share $.07 $.07
</TABLE>
[FN]
See notes to condensed financial statements.
</PAGE>
<PAGE>
WOLOHAN LUMBER CO.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MAR. 29, MAR. 31,
1997 1995
(000's omitted, except per share data)
<C> <C>
NET CASH USED IN OPERATING ACTIVITIES $ (6,346) $(8,192)
NET CASH USED IN INVESTING ACTIVITIES (967) (587)
NET CASH FROM (USED IN) FINANCING ACTIVITIES (2,009) 2,289
DECREASE IN CASH AND CASH EQUIVALENTS (9,322) (6,490)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 15,485 13,919
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,163 $ 7,429
<FN>
See notes to condensed financial statements
</TABLE>
<PAGE>
WOLOHAN LUMBER CO.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 29, 1997
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 ended March 29, 1997
are not necessarily indicative of the results that may be expected
for the entire year ending December 27, 1997.
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 28, 1996.
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.
In February 1997, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 128,
Earnings Per Share. SFAS 128 simplifies the standards for
computing earnings per share and makes them comparable to
international EPS standards. It also replaces the presentation of
primary EPS with a presentation of basic EPS. Implementation of SFAS
128 is not expected to have an impact on the Company's reporting of
EPS. SFAS 128 is required to be implemented for periods ending after
December 15, 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Results Of Operations
Sales totaled $77.4 million in the first quarter of 1997, a 5-
percent improvement from the first-quarter of 1996. The higher
sales combined with a 3-percent reduction in expenses resulted in
a 1997 first quarter loss of $.9 million (13 cents per share);
versus a $1.6 million loss (22 cents per share) for the same
period of 1996. First-quarter 1996 figures include a gain
($516,000 pre-tax, or 4 cents per share) on the sale of a closed
facility.
The Company's first quarter historically has the lowest sales
volume which often results in a net loss.
The sales improvement in the first quarter resulted from a 15-
percent increase in contractor (builder and remodeler) sales,
offset in part by a 9-percent decrease in consumer (DIY) sales.
Comparable-store sales increased 5 percent from the same period of
1996. Approximately 30 percent of the overall sales increase in
1997's first quarter was a result of higher average selling prices
of lumber compared with the same period of 1996.
The sales mix for the first quarter of 1997 was 67-percent
contractor sales and 33-percent consumer sales compared with a
61/39 mix for the first quarter of 1996.
Gross margins of 24.2 percent for the 1997 first quarter were
equal to 1996's first quarter and included a LIFO charge of $.4
million in both periods. Total margin dollars were $.9 million
higher compared with 1996's first quarter.
Selling, general and administrative expenses were reduced $.5
million, or 3 percent, from first quarter 1996 due primarily to
eliminating the expenses incurred in 1996 related to upgrading the
Company's information-technology ( $.4 million in first quarter
1996 and approximately $1 million for the year).
The effective tax rate (federal and state) for first quarter 1997
was 41 percent, compared with 40 percent for 1996's first quarter.
Financial Condition
At March 29, 1997, the Company's balance sheet remained strong.
Net working capital at March 29, 1997, totaled $61.5 million,
compared with $57.5 million at March 31, 1996, and $61.7 million
at Dec. 28, 1996. The current ratio at March 29, 1997, was 2.7 to
1, compared with 2.6 to 1 at March 31, 1996, and 2.8 to 1 at Dec.
28, 1996.
Cash and cash equivalents were $6.2 million at March 29, 1997,
compared to $7.4 million at March 29, 1996, and $15.5 million at
Dec. 28, 1996. The liquidity ratio at March 29, 1997, was .17 to
1, compared to .20 to 1 at March 29, 1996, and .44 to 1 at Dec.
28, 1996. Cash and cash equivalents decreased $9.3 million during
the 1997 first quarter due primarily to the seasonal buildup of
inventories which increased $12.3 million from year-end 1996.
The Company expects that net cash from operating activities and
available lines of credit should be adequate to meet future
working capital needs. There were no short-term borrowings
outstanding at the end of the first quarter 1997. The Company
continues to seek opportunities for growth through acquisitions of
additional stores.
Invested capital (long-term debt and shareowners' equity) was
equal to 78% of total assets at March 29, 1997, the same as year-
end 1996. At March 29, 1997, the total debt-to-asset ratio and
the ratio of equity to total assets remained unchanged from year-
end 1996 at .12 and .66:1, respectively.
Outlook
The Company intends to build on its first quarter progress as it
strives to improve profitability for the year. The Company is
better focused to improve consumer sales and is executing
strategies to increase sales of kitchens and bath, decks, sheds,
garages, pole barns and major remodeling projects. It is
providing more value-added services for its contractor customers.
The Company added seven "boom"-type delivery trucks during the
first quarter and is considering the addition of a truss-
manufacturing plant to one facility, and a wall-panel
manufacturing line to another retail location in the second
quarter.
PART II -- OTHER INFORMATION
ITEM 4. EXHIBITS AND REPORTS ON FORM 8-K
(a) Reports on Form 8-K
The registrant filed no reports on Form 8-K
during the quarter for which this Report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereto duly authorized.
WOLOHAN LUMBER CO.
Registrant
Date: May 12, 1997 /s/ David G. Honaman
David G. Honaman
Vice President - Administration
and Chief Financial Officer
Date: May 12, 1997 /s/ Edward J. Dean
Edward J. Dean,
Corporate Controller
(Principal Accounting Officer)
</PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-END> MAR-29-1997
<CASH> 6,163,000
<SECURITIES> 0
<RECEIVABLES> 30,413,000
<ALLOWANCES> 0
<INVENTORY> 57,048,000
<CURRENT-ASSETS> 96,964,000
<PP&E> 123,271,000
<DEPRECIATION> 61,090,000
<TOTAL-ASSETS> 161,740,000
<CURRENT-LIABILITIES> 35,451,000
<BONDS> 0
0
0
<COMMON> 6,916,000
<OTHER-SE> 99,515,000
<TOTAL-LIABILITY-AND-EQUITY> 161,740,000
<SALES> 77,354,000
<TOTAL-REVENUES> 19,238,000
<CGS> 58,631,000
<TOTAL-COSTS> 17,745,000
<OTHER-EXPENSES> 3,183,000
<LOSS-PROVISION> 154,000
<INTEREST-EXPENSE> 541,000
<INCOME-PRETAX> (1,581,000)
<INCOME-TAX> (649,000)
<INCOME-CONTINUING> (932,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (932,000)
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> 0
</TABLE>
