FORM 10-Q/A, AMENDMENT NO. 1
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 September 30, 1995
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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; 4,714,332 shares.
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PART I
FINANCIAL INFORMATION
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<TABLE><CAPTION>
DE TOMASO INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
9 Months Ended 9 Months Ended Sept 30, 3 Months Ended 3 Months Ended Sept 30,
Sept 30, 1995 1995 1994 Sept 30, 1995 1995 1994
-------------- ---- ---- ------------- ---- ----
(Note C) (In Millions of Italian Lire) (Note C) (In Millions of Italian Lire)
<S> <C> <C> <C> <C> <C> <C>
Net Revenue
From Manufacturing Operations
Sales $28,743,812 Lit 46,450 Lit 34,431 $10,509,901 Lit 16,984 Lit 10,627
Interest & Other 1,785,272 2,885 4,778 756,188 1,222 l,297
From Management/Financial Activities
Interest Commissions and Other 456,683 738 456,683 738
From Real Estate Activities 225,866 365 225,866 365
----------- ------ -------- ----------- ------- --------
31,211,633 50,438 39,209 11,948,638 19,309 11,924
Costs and Expenses
Manufacturing Operations
Cost of Products Sold 25,475,248 41,168 30,238 8,788,366 14,202 9,563
Selling, General and
Administrative Expenses 5,358,292 8,659 7,023 1,750,619 2,829 2,239
Interest 1,681,931 2,718 3,358 701,114 1,133 981
Management/Financial Activities
Interest Commissions and Other 526,609 851 526,609 851
Selling, General and
Administrative Expenses 161,510 261 161,510 261
Other (Income) Expense (25,990) (42) (25,990) (42)
Real Estate Activities
Cost of Real Estate Sold 17,327 28 17,327 28
Selling, General and
Administrative Expenses 251,237 406 251,237 406
Interest 355,817 575 355,817 575
Other (Income) Expense (45,173) (73) (45,173) (73)
---------- ------ ------- ---------- ------ ------
33,756,808 54,551 40,619 12,481,436 20,170 12,783
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Income (Loss) Before Minority
Interest and Income Taxes (2,545,175) (4,113) (1,410) (532,798) (861) (859)
Minority Interests Share
of (Income) Loss (240,718) (389) (709) (80,446) (130) (291)
Provision for Income Taxes (196,782) (318) (196,782) (318)
--------- ----------- ---------- --------- ----------- ---------
Net Income (Loss) $(2,982,675) Lit (4,820) Lit (2,119) $(810,026) Lit (1,309) Lit (1,150)
============ ============ =========== ========== =========== ===========
Net income (Loss) per share based
on the average number of
common shares and common
equivalent shares outstanding
during the period - Note D $(1.07) Lit (1,724) Lit (1,030) $(.19) Lit (306) Lit (559)
============ ============ =========== ========== =========== ===========
</TABLE>
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<TABLE><CAPTION>
DE TOMASO INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
Sept 30, Sept 30, December 31,
1995 1995 1994
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(Note C) (In Millions of Italian Lire)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 6,970,916 Lit 11,265 Lit 5,286
Marketable securities, at cost 9,287,129 15,008 5,000
Receivables
Trade, Net 20,466,583 33,074 14,416
Other, principally from installment
receivable from sale of subsidiary
and Italian Government 15,342,822 24,794 44,135
Inventories
Raw materials, spare parts and
work-in-process 16,855,817 27,239 17,609
Finished Products 862,005 1,393 2,565
Prepaid expenses and other current assets 935,644 1,512 1,322
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TOTAL CURRENT ASSETS 70,720,916 114,285 90,333
Assets of real estate activities 24,576,732 39,716
Property, Plant and Equipment - Net 5,612,005 9,069 12,954
Investments and other Assets 14,142,327 22,854 15,374
Goodwill 4,874,381 7,877
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TOTAL ASSETS $119,926,361 Lit 193,801 Lit 118,661
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Advances from banks $16,993,812 Lit 27,462 Lit 15,784
Accounts payable and accrued expenses 17,176,980 27,758 28,014
Sundry payables 8,550,124 13,817 35
Current portion of long-term debt 3,551,361 5,739 5,681
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TOTAL CURRENT LIABILITIES 46,272,277 74,776 49,514
Long Term Debt 12,775,371 20,645 5,004
Deferred Foreign Severance Pay 5,030,941 8,130 7,137
Minority Interests 10,014,233 16,183 13,849
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 in 1994 1,453
Common Stock, par value $2.50 (Lit 1,453) per share;
authorized 10,000,000 shares issued and outstand-
ing 2,057,446 shares in 1994 & 4,714,332 in 1995 4,871,287 7,872 2,988
Additional paid-in capital 56,669,554 91,578 47,543
Retained earnings (deficit) (8,518,564) (13,766) (8,946)
Treasury Stock (7,287,129) (11,776)
Equity adjustment from foreign currency translation - Note C 98,391 159 119
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45,833,539 74,067 43,157
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $119,926,361 Lit 193,801 Lit 118,661
============ =========== ============
</TABLE>
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<TABLE><CAPTION>
DE TOMASO INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
9 Months Ended 9 Months Ended Sept 30,
Sept 30 , 1995 1995 1994*
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(Note C)
(In Millions of Italian Lire)
<S> <C> <C> <C>
Operating Activities
Net income (loss) $ (2,982,675) Lit (4,820) Lit (2,119)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities (4,316,831) (6,976) 9,840
------------ ------------ ------------
Net cash provided by (used in) operating
activities (7,299,506) (11,796) 7,721
Investing Activities
Purchase of property, plant and equipment (688,738) (1,113) (1,291)
Proceeds from sale of subsidiary stock 16,707,921 27,000 23,750
Increase in investments (5,589,728) (9,033) (14,760)
Net proceeds from sales (purchases)
of common stock 2,045,173 3,305
------------ ------------ ------------
Net cash provided by investing activities 12,474,628 20,159 7,699
Financing Activities
Increase (decrease) in advances from banks (2,359,530) (3,813) (11,739)
Increase (decrease) in long-term debt 366,336 592 (1,994)
Other 517,946 837
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Net cash provided by financing activities (1,475,248) (2,384) (13,733)
------------ ------------ ------------
Increase (Decrease) in Cash and Cash Equiva-
lents 3,699,874 5,979 1,687
Cash and cash equivalents at beginning
of period 3,271,040 5,286 2,662
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Cash and Cash Equivalents at End of Period $6,970,914 Lit 11,265 Lit 4,349
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</TABLE>
*Reclassified to conform to 1995 presentation.
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DE TOMASO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
September 30, 1995
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 1994 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 seven Italian subsidiaries (G.B.M., Centro Ricambi,
American Finance, OAM S.p.A., Finprogetti International Holding S.A.,
Finprogetti Investment Immobiliari S.p.A., and Finprogetti Servizi
S.p.A. and their respective subsidiaries, and two United States sub-
sidiaries (Maserati Automobiles Incorporated and Maserati Automobiles,
Inc.) Significant intercompany accounts and transactions 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 September 30, 1995.
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 infor-
mative if they are presented in the currency in which the transaction
have occurred.
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The financial statements of U.S. entities for the three months ended
September 30, 1995 and September 30, 1994 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 transaction adjustments continue to
be reported in operations.
The U.S. dollar equivalent amounts are included solely for the con-
venience 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--COMPUTATION OF INCOME (LOSS) PER SHARE
Net loss per share for the nine months ended September 30, 1995 and September
30, 1994 and the three months ended September 30, 1995 and September 30, 1994
is computed only on the average number of shares of common stock outstan-
ding 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.
NOTE E--COMMON STOCK
In July, 1995, 1,000,000 shares of preferred stock were converted into
1,000,000 shares of common stock. In addition, 408,008 shares of common
stock were sold for Lit 8,205,057,180 ($5,077,387) to certain shareholders
of Finprogetti S.p.A. and 703,774 shares of common stock were purchased from
Alejandro De Tomaso, the Company's former Chairman, for Lit 4,900,000,000
($3,032,178) and certain other assets of the Company with a book value
of Lit 6,876,000,000 ($4,254,950).
Also in July, 1995, the Company issued 1,922,652 shares of common stock
to Finprogetti S.p.A. in exchange for its principal net assets with a
book value of Lit 31,803,000,000 ($19,680,074). The difference between
the current value of the shares of common stock issued of Lit 38,658,000,000
($23,922,030) and the book value of the assets acquired has been preliminarily
accounted for as goodwill. The Company has determined to discontinue the
real estate activities acquired. The effects of such discontinuance, if any,
cannot be estimated with accuracy until the completion of an analysis of the
net realizable value of the assets acquired.
The Company has also issued 30,000 shares of common stock in exchange
for the remaining minority interests in G.B.M. in connection with a
recapitalization of that subsidiary.
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
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Three Months Ended September 30, 1995 and September 30, 1994
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Manufacturing Operations
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Operations in the Company's manufacturing segment principally reflects
its G.B.M. S.p.A. motorcycle subsidiary. Since the Company engaged the
temporary management services of T.I.M. S.p.A., formerly a subsidiary of
Finprogetti, S.p.A., now a subsidiary of the Company since being acquired
in July 1995 from Finprogetti, G.B.M. has enjoyed a sustained period of
recovery.
Net sales increased approximately 60% to Lit. 16,984,000,000
($10,509,901) in the three month period ended September 30, 1995 compared
to Lit. 10,627,000,000 ($6,576,114) in the third quarter of 1994 which
itself represented a 47% increase in net sales over the period in 1993
before the engagement of T.I.M. Gross profits jumped 164% over the 1994
period, while gross profit margins increased to 16% in the 1995 period from
10% in the 1994 period.
G.B.M. unit sales increased 22% over the third quarter of 1994, which
1994 unit sales were 62% higher than the unit sales in the comparable 1993
period. Sales of the Company's largest and most profitable motorcycles in
the 1995 period increased 53% from the prior year period.
Selling, general and administrative expenses for the Company's
manufacturing operations segment include all of the Company's corporate
office expenses in order to preserve comparability to prior reports when
manufacturing was the only industry segment in which the Company was
engaged.
During the third quarter, the Company acquired Lita S.p.A., an Italian
manufacturer of welded tubes used in the automotive and furniture in-
dustries at a cost of Lit. 615,000,000 ($380,569). Sales and income from
Lita were immaterial to overall results.
Management and Financial Activities
- -----------------------------------
The Company completed its acquisition of the principal net assets of
Finprogetti S.p.A. in July. T.I.M. S.p.A., the hands-on management
services subsidiary and the other financial service subsidiaries acquired
from Finprogetti by the Company produced revenue of Lit. 738,000,000
($456,683), consisting principally of TIM's management fees and interest
earned on financing activities. Such revenues were more than offset,
however, by operating costs and
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expenses of Lit. 851,000,000 ($526,609) and selling, general and ad-
ministrative expenses of Lit. 261,000,000 ($161,510).
Real Estate Activities
- ----------------------
A portion of the assets acquired from Finprogetti relate to real
estate operations and development. The Company has decided to discontinue
those operations with a view to liquidating the assets and using the
proceeds to invest in troubled companies and other companies which present
opportunistic investment situations. The effect of the discontinuation
will be presented in future reports upon the completion of an analysis of
the net realizable value of those assets. In the three month period ended
September 30, 1995, the real estate activities lost Lit. 543,000,000
($336,015) on revenue of Lit. 365,000,000 ($225,886), due principally to
interest costs.
Consolidated Operating Results
- ------------------------------
Due principally to losses sustained by the Finprogetti financing and
real estate operations, and amortization of costs associated with the
Finprogetti acquisition, the Company lost Lit. 1,309,000,000 ($810,000), or
Lit. 306 ($.19) per share, in the three months ended September 30, 1995,
compared to Lit. 1,150,000,000 ($711,634), or Lit 559 ($.35) per share
in the comparable 1994 period. Losses in 1994, by contrast, were due to
G.B.M. operations and corporate overhead expenses. Due to the increase in
shares outstanding resulting from the Finprogetti acquisition, per share
data are not directly comparable.
Nine Months ended September 30, 1995 and September 30, 1994
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Manufacturing Operations
- ------------------------
Despite a poor first quarter at G.B.M., net sales for the nine month
period in 1995 increased 57.6% to Lit. 46,450,000,000 ($28,743,812)
compared to Lit 34,431,000,000 ($21,306,312) in the 1994 period. The 1994
period itself represented a 27% improvement over 1993. Gross profits
increased 26% from the 1994 to 1995 nine month period, but gross profit
margins declined to 11% from 12% as a lingering result of the Company's
poor first quarter 1995 results.
Managerial/Financial Activities
- -------------------------------
Having acquired the Finprogetti companies during the third quarter of
1995, there are no data to report regarding the nine months ended September
30, 1995 or September 30, 1994.
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Consolidated Operating Results
- ------------------------------
The Company lost Lit. 4,820,000,000 ($2,982,675), equal to Lit. 1,724
($1.07) per share in the 1995 nine month period, compared to a net loss of
Lit. 2,119,000,000 ($1,311,262), equal to Lit. 1,030 ($.64) per share in
the 1994 period. The loss in the 1995 period was due to the activities of
the former Finprogetti operations, and losses sustained earlier in the year
by G.B.M.; G.B.M. was restored to essentially break-even operation for the
third quarter of 1995.
Liquidity and Capital Resources
- -------------------------------
On July 21, 1995, the Company acquired 703,774 shares of stock
formerly owned by Alejandro De Tomaso, the Company's former Chairman, at a
price of $11.27 per share. The Company paid the purchase price by
delivering a combination of approximately $3,063,000 in cash and certain
other assets valued at approximately $4,869,000. The Company's ac-
quisition on July 17, 1995 of the principal assets of Finprogetti S.p.A.
was in exchange for 1,922,652 newly issued shares of common stock, valued
at an aggregate of approximately $25,000,000. Of such issuance, 248,673
shares, representing the consideration for an Italian tax refund of Lit.
5,000,000,000 ($3,094,059) due to Finprogetti, are being held in escrow
until the refund is received by the Company. Until release from escrow,
such shares may not be voted by Finprogetti. Certain Finprogetti
shareholders also purchased an additional 408,008 shares of common stock of
the Company by paying $5,077,387 in cash. The Company is obligated to
purchase the remaining 776,530 shares formerly owned by Mr. De Tomaso at
$11.27 per share by June 20, 1998 unless those shares have already been
sold.
The Company's cash holdings increased from the year ended December 31,
1994 by Lit. 5,979,000,000 ($3,699,874) due principally to the sale of
shares during the third quarter, net of cash paid in connection with the
purchase of shares formerly owned by Mr. De Tomaso, the receipt earlier in
the year of the final installment from Fiat Auto S.p.A. for its acquisition
of the Company's equity interest in Maserati S.p.A. The payment from Fiat
was largely invested in short-term marketable securities as well as in
other investments and assets which have been pledged to secure obligations.
Given the improvement in G.B.M.'s operations, the Company's internal
capital resources, together with available bank financing, are more than
adequate for its foreseeable capital needs, including the planned
redemption of up to 80% of the outstanding shares held by public
shareholders, and the businesses of G.B.M., TIM and other contemplated
activities relating to providing management and financial assistance to
troubled companies and other companies presenting opportunistic investment
situations.
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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 thereunto duly authorized.
DE TOMASO INDUSTRIES, INC.
Dated: December 20, 1995 By: s/ Howard E. Chase
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Howard E. Chase, President
Dated: December 20, 1995 By: s/ Carlo Previtali
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Carlo Previtali, Secretary
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