FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION l3 OR l5(d) OF THE
SECURITIES EXCHANGE ACT OF l934
For the quarter period ended March 31, 1995
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OR
( ) TRANSITION PURSUANT TO SECTION l3 OR l5(d) OF THE
SECURITIES EXCHANGE ACT OF l934
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 (I.R.S. Employer
of incorporation) Identification No.)
P.0. Box 856, l07 Monmouth Street, Red Bank, N. J. 0770l
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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 l3 or l5(d) of
the Securities Exchange Act of l934 during the preceding l2
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 l2, l3 or
l5(d) of the Securities Exchange Act of l934 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.
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PART I
FINANCIAL INFORMATION
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<TABLE><CAPTION>
DE TOMASO INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
3 Months Ended 3 Months Ended March 31,
March 31, 1995 1995 1994
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(In Millions of Italian Lire)
<S> <C> <C> <C>
Net Sales $ 5,780,516 Lit 9,850 Lit 10,364
Cost of products sold 6,465,962 11,018 9,068
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685,446 (1,168) 1,296
Selling, general and administrative
expenses 1,382,042 2,355 2,278
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(2,067,488) (3,523) (982)
Interest expense (454,255) (774) (1,361)
Interest and other income 595,070 1,014 1,520
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Income (loss) before minority
interests (1,926,643) (3,283) (823)
Minority interest share of income (93,310) (159) (192)
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NET INCOME (LOSS) $ (2,019,953) Lit (3,442) Lit (1,015)
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Net income (loss) per share based on
the average number of common
shares and common equivalent
shares outstanding during the
period - Note D $ (.98) Lit (1,673) Lit (493)
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</TABLE>
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<TABLE><CAPTION>
DE TOMASO INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
Mar. 31, Mar. 31, 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 $ 4,136,737 Lit 7,049 Lit 5,286
Marketable securities, at cost 7,539,319 12,847 5,000
Receivables
Trade, Net 3,196,595 5,447 14,416
Other, principally from installment
receivable from sale of subsidiary
and Italian Government 14,461,855 24,643 44,135
Inventories
Raw materials, spare parts and
work-in-process 12,397,887 21,126 17,609
Finished Products 1,755,282 2,991 2,565
Prepaid expenses 100,939 172 1,322
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TOTAL CURRENT ASSETS 43,588,615 74,275 90,333
Property, Plant and Equipment - Net 7,340,962 12,509 12,954
Investments and other Assets 16,160,211 27,537 15,374
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TOTAL ASSETS $67,089,788 Lit 114,321 Lit 118,661
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Advances from banks $ 8,022,887 Lit 13,671 Lit 15,784
Accounts payable and accrued expenses 17,634,390 30,279 28,014
Sundry payables 538,146 687 35
Current portion of long-term debt 2,894,366 4,932 5,681
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TOTAL CURRENT LIABILITIES 29,089,789 49,569 49,514
Long Term Debt 2,684,272 4,574 5,004
Deferred Foreign Severance Pay 4,104,460 6,994 7,137
Minority Interests 8,220,657 14,008 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 852,700 1,453 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 1,753,521 2,988 2,988
Additional paid-in capital 27,900,821 47,543 47,543
Retained earnings (deficit) (7,269,953) (12,388) (8,946)
Equity adjustment from foreign currency translation - Note C (246,479) (420) 119
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22,990,610 39,176 43,157
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $67,089,788 Lit 114,321 Lit 118,661
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</TABLE>
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<TABLE><CAPTION>
DE TOMASO INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
3 Months Ended 3 Months Ended March 31,
March 31, 1995 1995 1994*
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(Note C)
(In Millions of Italian Lire)
<S> <C> <C> <C>
Operating Activities
Net income (loss) $ (2,019,953) Lit (3,442) Lit (1,015)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities (3,405,516) (5,803) 5,608
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Net cash provided by (used in) operating
activities (5,425,469) (9,245) 4,593
Investing Activities
Purchase of property, plant and equipment (475,939) (811) (1,022)
Proceeds from sale of subsidiary stock 15,845,070 27,000 23,750
Increase in investments (7,161,385) (12,203) (15,000)
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Net cash provided by investing activities 8,207,746 13,986 7,728
Financing Activities Increase (decrease) in
advances from banks (1,240,023) (2,113) (10,080)
Increase (decrease) in long-term debt (691,901) (1,179) (1,631)
Other 184,272 314 994
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Net cash provided by financing activities (1,747,652) (2,978) (10,717)
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Increase (Decrease) in Cash and Cash Equiva-
lents 1,034,625 1,763 1,604
Cash and cash equivalents at beginning
of period 3,102,112 5,286 2,662
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Cash and Cash Equivalents at End of Period $ 4,136,737 Lit 7,049 Lit 4,266
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*Reclassified to conform to 1995 presentation.
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</TABLE>
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DE TOMASO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 3l, l995
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 foot-
notes 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 five Italian subsidiaries (G.B.M., 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 transactions have been eliminated upon consolida-
tion.
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 3l, l995.
Exchange gains and losses actually realized have been included
in operations.
In 1976, the Company determined that it would be a more appro-
priate 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 informa-
tive if they are presented in the currency in which the trans-
action have occurred.
The financial statements of U.S. entities for the three months
ended March 3l, l995 and March 3l, 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
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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--COMPUTATION OF INCOME (LOSS) PER SHARE
Net loss per share for the three months ended March 3l, l995
and the three months ended March 3l, 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.
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<PAGE>
Item 2. Management's discussion and analysis of Financial
Conditions and Results of Operations
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Operations
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While first quarter 1995 net sales fell by only 5% in
comparison to the first quarter of 1994, the cost of products
sold increased significantly and was the principal reason for the
net loss realized in the 1995 quarter. The increase in the cost
of products sold in the first quarter of 1995 is attributable to
the institution of a significantly enlarged program of component
outsourcing by the Company's Italian motorcycle manufacturing
subsidiary, G.B.M. S.p.A. The enlarged component outsourcing
program at G.B.M. was implemented at the beginning of the first
quarter of 1995. That program involves utilizing a number of
first time suppliers. In consequence, G.B.M. realized signifi-
cant delays in the receipt of outsourced components as well as
problems with quality of delivered components. This led to
disruption of the production process which in turn led to the
production of only 812 motorcycles during the first quarter.
G.B.M.'s management believes that the problems it encountered
with suppliers have been largely addressed, as evidenced by the
production of an aggregate of more than 950 units in the months
of April and May, 1995. Further increases in the rate of produc-
tion are anticipated. G.B.M.'s management remains confident that
the 5,500 motorcycles scheduled for production in 1995 will be
competed by year end.
Revenue and expense related to the Company's other
activities produced a break-even result, not significantly
different from the net results of those activities in the first
quarter of 1994.
Provided G.B.M. operates for the full 1995 year as
forecast, the significant operating loss realized in the first
quarter will be substantially ameliorated and further progress in
the "turnaround" of that subsidiary will have been demonstrated.
Liquidity and Capital Resources
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Management believes its investments in marketable secu-
rities and working capital, aggregating in excess of Lit.
50,000,000,000 ($29,342,723.00*), coupled with its various
Italian credit facilities, is more than ample to fund on-going
operations and its contemplated capital expenditure for the
balance of the current year.
G.B.M. was past due at December 31, 1994 in payment of
installments on a loan having an unpaid principal balance on that
date of Lit. 4,151,000,000 ($2,436,033.00*) and bearing interest
at 11.5%. The Company and the lender are in an advanced stage of
discussions for the full refinancing of the loan, which is
expected to be completed within a matter of weeks. The lender
has informally agreed to forebear from taking any action with
respect to the default in the interim.
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* Italian Lire amounts are reported in U.S. dollars based on the
conversion rate of 1,704 lire to the dollar prevailing at
March 31, 1995.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of l934, 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, 1995 By: s/ Catherine D. Germano
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Catherine D. Germano, Treasurer
Dated: May 19, 1995 By: s/ Howard E. Chase
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Howard E. Chase, Secretary
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