FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
-- or --
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter period ended March 31, 1994
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Commission file number 0-2642
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DE TOMASO INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 52-0466460
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
P.O. Box 856, 107 Monmouth Street, Red Bank, NJ 07701
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(Address of principal executive offices)
(Zip Code)
(908) 842-7200
Registrant's telephone number, including area code
No Change
(Former name, former address and former fiscal year,
if changed since last report)
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 periods 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
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to filed by Sections 12,13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by court. Yes ___ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the Issuer's
classes of common stock, as of the latest practicable date. Common Stock
$2.50 par value; 2,057,446 shares.
<PAGE>
PART I
FINANCIAL INFORMATION
<PAGE>
<TABLE><CAPTION>
DE TOMASO INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
3 Months Ended 3 Months Ended March 31,
March 31, 1994 1994 1993*
-------------- -----------------------------------------------
(Note C) (In Millions of Italian Lire)
<S> <C> <C> <C>
Net Sales $6,429,280 Lit. 10,364 Lit. 7,197
Cost of products sold 5,625,310 9,068 6,592
---------- ------ ------
803,970 1,296 605
Selling, general and administrative
expenses 1,423,151 2,278 2,507
---------- ------ ------
(609,181) (982) (1,902)
Interest expense (844,293) (1,361) (1,795)
Interest and other income 942,928 1,520 493
-------- ------ -----
Income (loss) before minority interests (510,546) (823) (3,204)
Minority interest share of income (loss) (119,107) (192) (14,989)
--------- ------ --------
Loss from continuing
operations (629,653) (1,015) (3,204)
Loss from discontinued
Operations (14,989)
-------- ------ --------
NET INCOME (LOSS) $ (629,653) Lit. (1,015) Lit. (18,193)
---------- ------ -------
========== ====== =======
Net income (loss) per share based on the
average number of common shares and
common equivalent shares outstanding
during the period
Continuing operations $ (.31) Lit. (493) Lit. (1,557)
Discontinued operations (7,286)
-------- ------ ------
$ (.31) Lit. (493) Lit. (8,843)
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======== ====== =======
*Reclassified to conform to 1994 presentation.
</TABLE>
<PAGE>
<TABLE><CAPTION>
DE TOMASO INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
March 31, March 31, December 31,
1994 1994 1993
------ -------- -------
--- (Note C) (In Millions of Italian Lire)
<S> <C> <C> <C>
Assets
Current Assets
Cash and cash equivalents $2,646,402 Lit. 4,266 Lit. 2,662
Marketable securities at cost 12,345,533 19,901 4,901
Receivables
Trade, Net 3,880,893 6,256 13,296
Other, principally from installment
receivable from sale of subsidiary,
Italian Government and affiliated
companies 27,760,546 44,750 42,962
Inventories
Raw materials, spare parts
and work-in-progress 11,651,365 18,782 18,329
Finished Products 1,929,901 3,111 3,023
Prepaid expenses 54,591 88 776
----------- ----------- -----------
TOTAL CURRENT ASSETS 60,269,231 97,154 85,949
Property, Plant & Equipment - Net 8,217,122 13,246 13,919
Other Assets 2,259,305 3,642 27,688
----------- ----------- -----------
TOTAL ASSETS $70,745,658 Lit 114,042 Lit 127,556
=========== =========== ===========
LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Advances from banks $ 8,011,787 Lit 12,915 Lit 22,995
Accounts payable and accrued expenses 13,821,960 22,281 25,802
Sundry payables 1,439,206 4,796 255
Current portion of long-term debt 2,975,186 4,796 6,601
---------- ---------- ----------
TOTAL CURRENT LIABILITIES 26,248,139 42,312 55,653
Long Term Debt 3,667,494 5,912 5,738
Deferred Foreign Severance Pay 4,400,124 7,093 7,245
Minority Interests 8,207,816 13,231 13,039
Shareholders' Equity
Voting Preferred Stock, convertible
share for share into Common Stock,
par value $2.50 (lit 1,453)
per share; authorized 2,000,000
shares; issued and outstanding
1,000,000 shares 901,365 1,453 1,453
Common Stock, par value $2.50
(lit 1,453) per share; authorized
10,000,000 shares issued and outstanding
2,057,446 shares 1,853,598 2,988 2,988
Additional paid-in capital 29,493,176 47,543 47,543
Retained earnings (deficit) (4,146,402) (6,684) (5,669)
Equity adjustment from foreign
currency translation - Note C 120,348 194 (434)
----------- ------------ -----------
28,222,085 45,494 45,881
----------- ------------ -----------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $70,745,658 Lit 114,042 Lit 127,556
=========== ============ ===========
</TABLE>
<PAGE>
<TABLE><CAPTION>
DE TOMASO INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
3 Months Ended 3 Months Ended March 31,
March 31, 1994 1994 1993
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(Note C) (In Millions of Italian Lire)
<S> <C> <C> <C>
Operating Activities
Net Income (Loss) $ (629,653) Lit. (1,015) Lit. (18,193)
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities 18,212,159 29,358 (2,618)
---------- ------- --------
Net cash provided by (used in)
operating activities 17,582,506 28,343 (20,811)
Investing Activities
Purchase of property, plant
and equipment (633,995) (1,022) (3,539)
Increase in investments (9,305,211) (15,000)
----------- -------- --------
Net cash provided by investing
activities (9,939,206) (16,022) (3,539)
Financing Activities
Increase (decrease) in advances
from banks (6,253,101) (10,080) (9,802)
Increase (decrease) in long-term
debt (1,011,787) (1,631) 33,688
Other 616,625 994 (594)
---------- ------- --------
Net cash provided by financing
activities (6,648,263) (10,717) 23,292
------------ -------- --------
Increase (decrease) in Cash and
Cash Equivalents 995,037 1,604 (1,058)
Cash and cash equivalents
at beginning of period 1,651,365 2,662 3,449
----------- ------- -------
Cash and Cash Equivalents at End of
Period $ 2,646,402 Lit. 4,266 Lit. 2,391
----------- ------- ------
=========== ======= ======
</TABLE>
<PAGE>
DE TOMASO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 1994
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q and
therefore do not include all information and footnotes necessary
for a fair presentation of financial position, results of
operations and changes in financial position in conformity with
generally accepted accounting principles. For a summary of the
Registrant's accounting principles, and other footnote information
reference is made to the Registrant's 1993 Annual Report on Form
10-K. All adjustments necessary for the fair presentation of the
results of operations for the interim periods covered by this
report have been included. All of such adjustments are of a normal
and recurring nature.
NOTE B--PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company, its five Italian subsidiaries (GBM, Centro Ricambi,
American-Finance, OAM S.p.A., and Hotel Roma) and two United States
subsidiaries (Maserati Automobiles Incorporated and Maserati
Automobiles, Inc.) Significant intercompany accounts and trans-
actions have been eliminated upon consolidation.
NOTE C--CHANGE IN BASIS OF TRANSLATION TO U.S. DOLLAR EQUIVALENTS
The accompanying financial statements, expressed in Italian lire,
have been translated in U.S. dollar equivalents at the rate of
exchange prevailing at March 31, 1994
Exchange gains and losses actually realized have been included in
operations.
In 1976, the Company determined that it would be a more appropriate
and meaningful presentation if the primary financial statements
were shown in Italian lire because the Company's manufacturing
operations are entirely in Italy. Reports to the Italian government
are made in lire, purchases of capital goods, financing
arrangements and virtually all aspects of the Company's business
are conducted in lire. Trends developed in reporting financial
information should also be more informative if they are presented
in the currency in which the transactions have occurred.
The financial statements of U.S. entities for the three months
ended March 31, 1994 and March 31, 1993 have been translated to
Italian lire in accordance with FASB Statement No. 52, "Foreign
Currency Translation." Under that Statement, all balance sheet
accounts are translated at the current exchange rate and operations
statement items are translated at the average exchange rate for the
quarter; resulting translation adjustments are made directly to a
separate component of stockholders' equity. Certain other trans-
action adjustments continue to be reported in operations.
The U.S. dollar equivalent amounts are included solely for the
convenience of the shareholders of De Tomaso Industries, Inc. It
should not be construed that the assets and liabilities, expressed
in U.S. dollar equivalents, can actually be realized in or
extinguished by U.S. dollars at the exchange rates used in the
accompanying translation because of fluctuations in the rates of
exchange.
NOTE D--GAIN ON SALE OF SUBSIDIARY STOCK
In May, 1993, the Company sold 51% of the common stock of Maserati,
S.p.A., a 51% subsidiary of OAM S.p.A., to Fiat Auto S.p.A. for Lit
75,750,000,000 ($46,991,351) payable in installments ending January
1, 1995. The sale resulted in a gain of Lit 196,157,000,000
($121,685,484) after adjusting the final installment to present
value. The disposal of this segment has been accounted for as a
discontinued operation and, accordingly, its operating results are
segregated and reported as a discontinued operation in 1993.
NOTE E--COMPUTATION OF INCOME (LOSS) PER SHARE
Net loss per share for the three months ended March 31, 1994 and
the three months ended March 31, 1993 is computed only on the
number of common stock outstanding at all times during such
periods. Convertible preferred shares are not considered to be
common stock equivalents because to do so would be anti-dilutive.
<PAGE>
Item 2. Management's discussion and analysis of Financial
Conditions and Results of Operations
----------------------------------------------------
As a consequence of the Company's sale of its 51% equity
interest in its Maserati subsidiary in May 1993, which is reported as a
discontinued operation in the accompanying unaudited financial
statements for the 1993 period, Management's discussion of the Company's
operations deals only with its continuing operations for the 1993 and
1994 periods.
Operations
----------
Net sales improved 44% to Lit. 10,364,000,000 ($6,429,280),1
comparing the first quarter of 1993 to the first quarter of 1994; gross
profits more than doubled comparing the same periods. G.B.M.'s
motorcycle unit sales increased by 76% over 1993. G.B.M.'s sales
accounted for approximately 93% of the Company's consolidated net sales
in the 1994 quarter and for approximately 83% of consolidated net sales
in the 1993 period. The Company's other subsidiaries are all operating
at or near break-even levels, and generate sufficient revenue to fund
their respective operations. None of the subsidiaries' operations,
taken individually or in the aggregate, is material to the results of
operations of the Company on a consolidated basis.
The Company's loss from continuing operations dropped by 74.3%
(before minority interests) as a result primarily of the improvement in
G.B.M.'s performance. The operating loss for G.B.M. alone declined by
50% from approximately Lit. 2,200,000,000 ($1,364,764) in the 1993
period to approximately Lit. 1,100,000,000 ($682,382) in the first
quarter of 1994.
Including the loss attributable to the discontinued Maserati
operation for 1993, the Company's net loss declined 94.4% to Lit.
1,015,000,000 ($629,653) from Lit. 18,193,000,000 ($11,285,980).
The increase in G.B.M.'s net sales is attributable primarily to a
single contract to supply motorcycles to a South American country.
Management is hopeful that with the new management assistance
arrangement which is currently in place at G.B.M., that subsidiary will
be able to continue progressing toward recovery and profitability.
Liquidity and Capital Resources
-------------------------------
Cash and cash equivalents increased 60.3% at March 31, 1994 from
year-end 1993, and marketable securities more than quadrupled. The
improvements were due principally to the payment by Fiat of its January
1994 installment on the Maserati sale and the receipt of payment on
outstanding trade receivables. The decline in Other Assets reflects the
reclassification (under applicable accounting rules) of the pending
January 1995 Fiat installment to an Other Receivable. The Company used
a portion of the 1994 Fiat installment payment to reduce bank debt by
approximately Lit. 10,000,000,000 ($6,203,474).
--------------------
1Lire amounts have been converted to dollar amounts at the
rate of 1612 lire to the dollar prevailing at March 31, 1994.
<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 thereunto duly authorized.
DE TOMASO INDUSTRIES, INC.
Dated: May 19, 1994 By: /s/ Catherine D. Germano
---------------------------
Catherine D. Germano
Treasurer
Dated: May 19, 1994 By: /s/ Howard E. Chase
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Howard E. Chase, Esq.
Secretary
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