FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter period ended June 30, 1994
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OR
( ) TRANSITION PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-2642
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DE TOMASO INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Maryland 52-0466460
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(State or other jurisdiction of incorporation) (I.R.S. Employer
Identification No.)
P.0. Box 856, 107 Monmouth Street, Red Bank, N. J. 07701
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Address of principal executive offices - Zip Code)
(908) 842-7200
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(Registrant's telephone number, including area code)
No Change
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(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
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
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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 be 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
6 Months Ended 6 Months Ended June 30, 3 Months Ended 3 Months Ended June 30,
June 30, 1994 1994 1993 * June 30, 1994 1994 1993 *
-------------- ---- ------ -------------- ---- -------
(Note C) (In Millions of Italian Lire) (Note C) (In Millions of Italian Lire)
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 15,094,483 Lit 23,804 Lit 19,906 $ 8,522,511 Lit 13,440 Lit 12,709
Cost of products sold 13,110,336 20,675 18,655 7,360,178 11,607 12,063
------------ ----------- ----------- ------------ ----------- ----------
1,984,147 3,129 1,251 1,162,333 1,833 646
Selling, general and admin-
istrative expenses 3,033,608 4,784 4,999 1,589,093 2,506 2,492
------------ ----------- ----------- ------------ ----------- ----------
(1,049,461) (1,655) (3,748) (426,760) (673) (1,846)
Interest expense (1,507,292) (2,377) (3,490) (644,261) (1,016) (1,695)
Interest and other income 2,207,356 3,481 2,684 1,243,500 1,961 2,191
------------ ----------- ----------- ------------ ----------- ----------
INCOME (LOSS) BEFORE
MINORITY INTERESTS (349,397) (551) (4,554) 172,479 272 (1,350)
Minority interest share of
income (loss) (265,060) (418 (143,310) (226)
------------ ----------- ----------- ------------ ----------- ----------
Income (Loss) from
continuing operations (614,457) (969) (4,554) 29,169 46 (1,350)
Income (Loss) from
discontinued operations 160,841 175,830
------------ ----------- ----------- ------------ ----------- ----------
NET INCOME (LOSS) $ (614,457) Lit (969) Lit 156,287 $ 29,169 Lit 46 Lit 174,480
============= =========== =========== ============ =========== ===========
Net income (loss) per share
based on the average number
of common shares and common
equivalent shares outstanding
during the period
Continuing operations $(.30) Lit (471) Lit (1,489) $.01 Lit 15 Lit (442)
Discontinued operations 52,606 57,509
------------ ----------- ----------- ------------ ----------- ----------
$(.30) Lit (471) Lit 51,117 $.01 Lit 15 Lit 57,067
============= =========== =========== ============ =========== ===========
</TABLE>
<PAGE>
<TABLE> <CAPTION>
DE TOMASO INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
June 30, June 30, December 31,
1994 1994 1993
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(Note C) (In Millions of Italian Lire)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,403,932 Lit 2,214 Lit 2,662
Marketable securities, at cost 12,619,531 19,901 4,901
Receivables
Trade, Net 4,797,083 7,565 13,296
Other, principally from install-
ment receivable from sale of
subsidiary, Italian
Government and affiliated
companies 27,055,802 42,667 42,962
Inventories
Raw materials, spare parts
and work-in-process 12,090,678 19,067 18,329
Finished Products 2,078,630 3,278 3,023
Prepaid expenses 66,582 105 776
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TOTAL CURRENT ASSETS 60,112,238 94,797 85,949
Property, Plant & Equipment - Net 8,141,408 12,839 13,919
Other Assets 2,273,938 3,586 27,688
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TOTAL ASSETS $70,527,584 Lit 111,222 Lit 127,556
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LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Advances from banks $ 6,876,982 Lit 10,845 Lit 22,995
Accounts payable and
accrued expenses 13,596,702 21,442 25,802
Sundry payables 1,377,933 2,173 255
Current portion of long-term debt 3,442,613 5,429 6,601
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TOTAL CURRENT LIABILITIES 25,294,230 39,889 55,653
Long Term Debt 3,117,311 4,916 5,738
Deferred Foreign Severance Pay 4,563,728 7,197 7,245
Minority Interests 8,533,291 13,457 13,039
Shareholders' Equity
Voting Preferred Stock, con-
vertible 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 921,370 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 1,894,737 2,988 2,988
Additional paid-in capital 30,147,749 47,543 47,543
Retained earnings (deficit) (4,209,258) (6,638) (5,669)
Equity adjustment from foreign
currency translation - Note C 264,426 417 (434)
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29,019,024 45,763 45,881
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TOTAL LIABILITIES & SHAREHOLDERS'
EQUITY $70,527,584 Lit 111,222 Lit 127,556
=========== =========== ===========
</TABLE>
<PAGE>
<TABLE> <CAPTION>
DE TOMASO INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
6 Months Ended 6 Months Ended June 30,
June 30, 1994 1994 1993
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(Note C) (In Millions of Italian Lire)
<S> <C> <C> <C>
Operating Activities
Net income (loss) $ (614,457) Lit (969) Lit 156,287
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities 19,483,195 30,725 160,168
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Net cash provided by (used in)
operating activities 18,868,738 29,756 (3,881)
Investing Activities
Purchase of property, plant &
equipment (672,162) (1,060) (981)
Increase in investments (9,511,731) (15,000)
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Net cash provided by investing
activities (10,183,893) (16,060) (981)
Financing Activities
Increase (decrease) in
advances from banks (7,704,502) (12,150) (367)
Increase (decrease) in
long-term debt (1,264,426) (1,994) 3,429
------------ ------------- ------------
Net cash provided by financing
activities (8,968,928) (14,144) 3,062
-------------- ------------- ------------
Increase (Decrease) in Cash and
Cash Equivalents (284,083) (448) (1,800)
Cash and cash equivalents at
beginning of period 1,688,015 2,662 3,449
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Cash and Cash Equivalents at End
of Period $ 1,403,932 Lit 2,214 Lit 1,649
============= ============ ============
</TABLE>
<PAGE>
DE TOMASO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
June 30, 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 June 30, 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 June 30, 1994 and June 30, 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.
<PAGE>
NOTE C--(Continued)
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 ($48,034,242) payable in installments ending
January 1, 1995. The sale resulted in a gain of Lit 196,157,000,000
($124,386,176) 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 income for the six months ended June 30, 1993 and the three
months ended June 30, 1994 and June 30, 1993 is computed on the
number of common stock and common stock equivalents outstanding
at all times during such periods.
Net loss per share for the six months ended June 30, 1994 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
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As a consequence of the sale of the Company's 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
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Three Months Ended June 30, 1994 and June 30, 1993
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Net sales increased approximately 6% to Lit. 13,440,000,000
($8,522,511)1 in the three month period ended June 30, 1994 compared to the
second quarter of 1993. Gross profits increased approximately 184% over the
1993 period, while gross profit margins increased comparably, to 13.6% in the
1994 period, from approximately 5% in the 1993 period.
The improvement in operating results is attributable primarily to
growth in G.B.M. motorcycle and related parts sales, which accounted for
approximately 93% of the Company's consolidated net sales in the second
quarter of 1994. While unit sales in the 1994 second quarter were
essentially unchanged from the 1993 period, unit production has been steadily
increasing since new management was installed at the G.B.M. facility early in
the second quarter, from approximately 14 units per day to over 19 units per
day currently.
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 their operations, however, is material to the results of
operations of the Company on a consolidated basis.
The Company earned Lit. 46,000,000 ($29,169), equal to Lit. 15
($.01) per share in the 1994 second fiscal quarter, compared to net income of
Lit. 174,480,000,000 ($110,640,450), equal to Lit. 57,067 ($36.19) per share,
in the 1993 period. Results for 1993, however, are inclusive of income
realized from the sale by the Company of its 51% equity interest in its
discontinued Maserati subsidiary. Excluding discontinued operations, the
Company's Lit. 46,000,000 net income in the second quarter of 1994 compares
to a net loss of Lit. 1,350,000,000 ($856,056), equal to Lit. 442 ($.28) per
share, sustained in the 1993 period.
Six months ended June 30, 1994 and June 30, 1993
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Net sales for the six month period in 1994 increased over 20%, to
Lit. 23,804,000,000 ($15,094,483) compared to the 1993 period, while gross
profits increased over 150% to Lit. 3,129,000,000 ($1,984,147) in the six
months ended June 30, 1994, compared to the 1993 period. G.B.M.'s unit sales
increased approximately 23% in 1994. The growth in gross profits is largely
due to an improvement in the comparative mix of motorcycles sold by G.B.M.
between the two periods.
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1Lire amounts have been converted to dollar amounts at the
rate of 1577 lire to the dollar, the rate prevailing at June 30,
1994.
<PAGE>
The Company lost Lit. 969,000,000 ($614,458), equal to Lit. 471
($.30) per share in the 1994 six month period, compared to net income
(including discontinued operations) of Lit. 156,287,000,000 ($99,103,994),
equal to Lit. 51,117 ($3.28) per share, in the 1993 period. Excluding
discontinued operations, the Company lost Lit. 4,554,000,000 ($2,887,762),
equal to Lit. 1,489 ($.94) per share, in the 1993 period.
Liquidity and Capital Resources
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Largely as a result of the May 1993 sale of its equity interest in
the Maserati subsidiary, the Company has ample liquid assets, and has reduced
bank debt by approximately Lit. 12,150,000,000 ($7,704,502) since December
31, 1993. G.B.M., while it has been able to maintain operations by utilizing
cash generated from operations, bank financing and credit from suppliers,
will require additional cash to support increasing sales in the second half
of the current year.
<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: August 19, 1994 By: s/ Catherine D. Germano
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CATHERINE D. GERMANO
Treasurer
Dated: August 19, 1994 By: s/ Howard E. Chase
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HOWARD E. CHASE
Secretary
